The United Nations Industrial Development Organization (UNIDO) recently released its overview of global industry, updating its database on value added in the sector through 2023, from which the IEDI constructs the ranking of the world’s largest manufacturing hubs, highlighting Brazil’s position.

We improved our ranking, but this had little to do with our performance. Rather, it stemmed more from the negative performance of other countries. As a result, Brazil’s share of global manufacturing value added declined once again, though less sharply than in previous years.

Thus, at least until 2023, the long-term trend of decline in the global industrial system continued, largely due to the underperformance of higher-technology sectors, which have led global industrial expansion since the pandemic.

Nevertheless, it’s worth noting that Brazil’s manufacturing base is larger than that of many developed countries and, given the high concentration of value added in just a few countries (61.3% in only five countries), our industrial production capabilities are not negligible.

Moreover, much of what is needed for the sector to perform better in Brazil depends on our own actions. This includes eliminating factors contributing to the so-called “Brazil Cost,” fostering a healthier macroeconomic environment, and seizing opportunities arising from the sustainability and energy transition agenda.

There have recently been positive signs in this direction, such as the tax reform and the revival of an industrial strategy focused on sustainability and digitalization, but much remains to be done. The implementation and monitoring of these initiatives remain critical for success.

Amid uncertainties caused by U.S. protectionism under the Trump administration, a skillful and proactive diplomatic strategy and foreign trade policy are even more necessary to identify opportunities and facilitate access to foreign markets.

Now, to the numbers. Between 2022 and 2023, Brazil climbed from 16th to 15th place in the global manufacturing ranking, based on the sector’s value added in U.S. dollars at constant 2015 prices.

This improvement for Brazil is explained by Ireland’s drop of 3 positions, which also helped Turkey and Russia to rise in the ranking. In 2023, disruptions in global supply chains, adjustments in pharmaceutical production post-pandemic, and weakened internal and external European demand led to a contraction in Ireland’s industry.

However, Brazil’s share of global manufacturing value added fell from 1.22% to 1.21% between 2022 and 2023, due to a performance below the global sector average.

For the rest of the ranking, there was little change among the top 10 industrial hubs. The exception was a swap between South Korea (from 5th to 6th) and India (from 6th to 5th). All others remained unchanged, including the global leaders: China, in 1st place, accounting for 31.8% of global manufacturing, followed by the U.S. in 2nd with 15.1%, and Japan in 3rd with 6.6% of the total.

It’s worth noting that, in terms of value added, China’s share in 2023 exceeded the combined share of the next four industrial powers—U.S., Japan, Germany, and India—which together accounted for 29.5% of the sector in the world. This is a stark contrast to 2005, when China (13.2%) was in 2nd place, with a share 40% smaller than that of the U.S. (22.6%), then the leading industrial power.

Between 2005 and 2023, much has also changed for Brazil. Back then, we held the 10th position among the world’s largest manufacturing hubs, with a 2.2% share of global value added. Ten years later, we had dropped out of the top 10, falling to 11th place with a 1.55% share.

From 2015 to 2023, though more slowly, we continued to lose share and, consequently, fell in the ranking, except in years when other countries faced challenges in the sector, as was the case with Ireland.

Among the top 20 manufacturing nations, Brazil is one of the countries that fell the most in the ranking: it dropped 5 positions between 2005 and 2023, surpassed only by Spain and Canada, each of which fell 7 positions. Among those that advanced the most are Ireland, India, Turkey, and Taiwan.

UNIDO’s data also allow for a detailed analysis of Brazil’s evolution, though sectoral breakdowns have a greater lag, with 2022 being the most recent year available, recently updated; this does not compromise the analysis of longer-term trends.

Of the 20 manufacturing sectors identified by UNIDO, the number of sectors in which Brazil ranks among the top 10 globally fell from 9 to 5 between 2005 and 2022. The largest drops occurred in office and computing equipment (from 11th to 19th), other transport equipment (from 11th to 17th), and printing and reproduction (from 10th to 22nd).

We are better positioned in rankings for sectors processing mineral and agricultural commodities: coke and petroleum derivatives (4th in 2022), food and beverages (7th), basic metals (7th), paper and paper products (7th), and leather and footwear (7th). Our weakest positions are generally in higher-tech sectors, which are also the ones where we have regressed the most since 2005.

Brazil’s share of global value added in high- and medium-high-tech industries, according to UNIDO data, halved between 2005 and 2022, dropping from 1.8% to 0.9%. Our ranking in this segment fell from 11th to 18th over the same period.

The weight of this more technology-intensive segment in Brazil’s industrial structure also declined, from 33.1% in 2005 to 31.3% in 2022. This is due to the importance of commodity processing in the country, which is less technology-intensive, but also to numerous distortions in our business environment that hinder longer production chains, characteristic of more technological activities.

In 2022, the share of these sectors in Brazil lagged behind other prominent emerging economies, such as Mexico (42.4%), India (41.6%), China (41.5%), Thailand (41.4%), and Vietnam (38.7%). Countries with the highest share of these sectors are industrial hubs specialized in technological activities, such as Singapore (82.3%), Taiwan (74.5%), and Switzerland (71.4%).

The full text is available in Portuguese