Really interesting. One thing that stands out to me with Embraer is how fortunate the timing seemed to be. It privatised basically right when the US regional plane market was undergoing this shift to jet-powered aircraft, opening up an opportunity that's pretty rare if you're an aerospace firm. Maybe if that change hadn't come around, Embraer would have sunk, but if Embraer hadn't privatised and the shift in the US market still took place, it would have continued plodding along, making crop dusters and Super Tucanos.
I guess this points to the importance of doing whatever you're doing, as long as the policy is right, at scale. The more firms you put in Embraer's position, the more likely you are to eventually have one.
I agree with a lot of this, indeed, it's a fundamental element in IO as I understand it, it's hard to disentangle how much "luck" a firm has had vs how much it's been "good". If I recall correctly, I once asked a fellow PhD student who specialized in IO about this and they basically said that, yeah, it's virtually impossible to tell them apart, they're typically grouped together because of this!
That said, making sure a firm is ready to take advantage of opportunities isn't easy. I.e., aside from the extra freedom afforded from the privatization, most of the fundamental elements were there, but it took a concerted effort to get Embraer (and ITA and DCTA) to that state.
Well at least they made the right decision to outsource their jet engines and not try to develop their own. Jet engines are key and hard to design and manufacture, as evidenced by the trouble China, India and Japan have in developing theirs.
Regional jets are disproportionately responsible for airport congestion, which would be far less problematic if regional flights either reverted to prop planes (with their different traffic patterns), or replaced two or three regional jet flights with a single 737 or A320 flight.
If the US had decided to fight airport congestion (and thus flight delays) by punitively taxing jets of less than 100 seats then Embraer would have been far less successful.
Prop planes are unpopular for a reason: noise, cramped seats and stowage and turbulence from flying at low altitude. Airport congestion could be solved for all jets with a modern GPS air traffic control system that allows closer spacing between aircraft.
What do propeller planes have to do with airport congestion? Using shorter runways?
Airports charge landing fees and terminal usage fees. I think that's the way to incentivize efficient usage of airports rather than taxes. Regional jets also enable routes to smaller cities, which has positive social and economic externalities, so the animosity towards them seems a bit odd to me.
This was such a great piece. I’m a Brazilian subscriber, and I have to say—anytime I see the words “industrial policy” and “Brazil” together, there’s this automatic cold shiver. It’s hard not to flinch. The track record is mostly a catalog of expensive failures—big dreams, strange incentives, and a lot of political inertia dressed up as vision. The Zona Franca is the perfect case: something that looks like success on a map but feels, in every practical sense, like a policy held together by lobbying muscle and sheer habit.
Embraer, really does stop you in your tracks. It’s so rare to see a Brazilian industrial project that worked—really worked—and not just as a domestic pet project, but as a global player. The ecosystem around it—ITA, DCTA, São José dos Campos—almost feels accidental, like a pocket of institutional competence that managed to escape gravity. What struck me most is how export pressure and technical seriousness did the work that protectionism alone never could. It’s a real reminder that industrial policy can work, but only if it’s disciplined by reality.
Thank you, Pedro—this was incredibly thoughtful and deeply satisfying to read. And thank you, Noah, for hosting it. Pieces like this remind me why I subscribed in the first place.
Thank you! Very sincerely, really appreciate the very kind comments.
And yes, I agree with you overall. Brazil's Industrial Policy is littered with failures... the attempt at creating a computer hardware manufacturing industry being a particularly absurd example, as I wrote above. And import substitution lead Brazil down a path that it's never really managed to completely "escape", even if things are, in some ways, better.
Why Embraer succeeded, despite all I wrote above, remains <almost> a conundrum to me. As, the individual elements are clear, but why were prioritized (compared to other cases) and coalesced so well in this case? Was it the fact that it was a semi-independent, military-run institution? The initial boost from copying MIT? It's really not obvious, because, by all rights, Embraer should not be a technological manufacturing powerhouse that it is and understanding the "soft elements" (i.e., the culture) that allowed it flourish could be invaluable for Brazil.
Reminds of friend's stories of their experiences in Brazil.
One, a college prof, was there to study the cement industry. He found that the cost of a yard of concrete in Brazil was the same as in the US. Labor costs in the US were higher but machinery was used where in Brazil manpower was just thrown a the job.
The other, was in the Peace Corps trying to teach Brazil how to steal Silly Con Valley technology. His wife was in the Corps too, but in Brazil, middle class women don't work so she got to stay home and watch the construction of a hospital across the street. Every morning hundreds of workers would arrive. Over the two years they were there, there was no apparent progress on the hospital. That was back in the 60's/70's.
" but this is Brazil we’re talking about: whenever a certain privilege is granted by government to a group, that group will fight tooth and nail to keep it."
it's not just Brazil where that happens...
Nothing's so permanent as a temporary government program
Thank you Pedro for this great article! Unfortunately, the example of Manaus here is too common among countries using import substitution industrialization, and industrial policy could incentivize countries to build/subsidize industries in suboptimal places.
Argentina is a good example though - they built various tariffs and non-tariff barriers to protect their electronic manufacturing in Tierra del Fuego (which is just doing final assembly for electronic goods imported from overseas). Even Vietnam has same problems with building oil refineries - we chose to build 2 in the Central region, faraway from the oil wells in the South. It turns out that these refineries could not work much with our oil, and we have to import crude oil from Saudi Arabia and Kuwait!
And yes, I largely agree. Far too often, import substitution (and industrial policy) results in these half-formed clusters that are trying to achieve political goals, but without the care and planning needed to make them fully realized or, even worse, they are fundamentally unsound and result in costly "successes". I should have mentioned the example of the Tierra del Fuego example, it's very similar in that respect to the Manaus case!
I think the Tierra del Fuego case is even more nonsense than Manaus; after all Manaus is a big city by itself, has easy access to the ocean by the Amazon (even though it is deep inland), and building infrastructure there helped to develop Brazilian hinterland further (though as you said, the benefit is questionable). Meanwhile Tierra del Fuego is just in the middle of nowhere ("the end of the world"), few infrastructure there even in modern day, and population is very low (still the least populous province in Argentina).
I am worrying that given Trump's preference to pork-barreling (channeling money to swing states), we could see the same thing happens in the US, and even worse; with factories promised but never built.
P/s: I am surprised to see the disparities between Rio and Sao Paulo in 1950 compared to other states of Brazil; even though it was a federation, was everything just channelled to these two states before? Why the Southern states (Parana, Santa Catarina and Rio Grande do Sul) were still so poor compared to these 2 states, despite high European immigration there?
And a more important question, do you think that the liberalization/"neoliberal" wave in the 1980s-1990s broke the economic development of Brazil? Some Brazilians online told that due to privatization, Brazilian elites switched from maintain an industrial base to return to an extractive economy, and with the industrial know-how lost, it lost the opportunity to be like South Korea!
1 - I'm not 100% sure, but I believe that São Paulo state had the biggest industrial base in the 1950s, which helped it have a relatively high GDP per capita at that time. Rio also had a large base and also benefited significantly from being the capital of Brasil at the time. No other states had as large industrial base at that time.
So, to answer your question directly, Rio did benefit a lot from resources being channeled there, yes, but São Paulo not so much. One interesting thing is that the Brazilian federal government was relatively weak and total gov spending was low at that time; even after the Vargas' dictatorship, each state's government spending was probably more important than federal spending again, barring Rio (and, later, Brasilia).
2 - That's such a tricky question, something for a proper, long post. There <may> be something to an argument like that, but I doubt it played a large role compared to other factors. Instead, I'd guess that the fact Brazil was never well integrated into complex supply chains (as far as I can tell) and the rise of China played much, much larger roles. But this is just off the cuff.
Thank you for your answer! I think the second one is particularly relevant, as many countries in sub-Saharan Africa did try to open their economy for foreign investments in the 1990s, yet backlash from the people ended up leading to riots and push investment to China and Southeast Asia (this has been covered in The Bottom Billion book by Paul Collier: https://en.wikipedia.org/wiki/The_Bottom_Billion )
I think Brazil, even though not suffered from the same kind of political instability (no, Collor or Lula were not that chaotic), could not compete with China during the opening times as well, and ended up rely on resource exports.
I am looking forward for your post about Brazilian industrialisation though! One thing struck me about Brazilian economy is that the country always relies on resource exports (first brazilwood, then sugar, then gold, coffee, rubber and now soybeans, petroleum and iron ore); and industrialisation started very late (from the 1930s, even though Brazil received quite a lot of British capital before!)
Would you be able to explain why Brazil (and Argentina) industrialized so late, and when they did it they had to use heavy-handed state-led development? Some people said that was because of late abolition of slavery, some said that was because later immigration compared to the US, and some even blamed that was due to the lack of high-quality coal!
I'm not planning on writing a post on Brazilian industrialization for now, although it is an interesting topic and it would be fun to do so at some point.; I like the suggestion. It's a long topic, though.
Briefly, your suggested answers are probably a part of it. I'd also add the perennially tricky issue of institutions, the issue of education and lack of technical know-how. Obviously, slavery plays a significant role in explaining all three!
“ was dominated by inefficient turboprop planes in the early 90s and fuel-efficient jets were primed to take over.”
Minor bit…That’s not quite correct. Turboprops are more efficient in the role of regional aircraft than jets. The issue with turboprops is that consumers think they are unsafe and that they offer a substantially inferior passenger experience. It’s also true that to be most efficient turboprops would need to operate at lower altitude and slower speeds. Which passengers also hate. You can try and fly them higher and faster but then the efficiency advantage disappears.
95% of the issue is if Delta Connect offers an E175 passengers will opt for that in droves if American or United are offering Dash-8 or in the old days SAAB turboprops.
Good point. I'm not an aviation expert, but from what I understand, that sounds correct to me, that if operated at comparable levels, the jets win out, but not necessarily otherwise.
Really interesting, I really appreciate the post, Pedro! I'm an aerospace engineer and have always been curious about how Brazil came to have a successful airplane manufacturer in an industry which only has a few companies left after consolidation.
As a follow up, I’d suggest your view on EMBRAPA, Esalq, and their role in agriculture in Brazil. One could argue it’s another industrial policy success — if you consider agriculture an industry.
I wonder if the continuous subsidies (or investments) by the government were compensated for by the profits minus losses incurred over the years. Would Brazil have been richer had it leased jets from abroad and invested the subsidies etc.. in Treasury Bills.... I suspect Brazil has been subsidizing world travelers for a long time...it certainly lost money more years than it made money but the total amount is hard to ascertain as financial information is sketchy.... The difference between Bombardier and Embraer is that Canada cut the cord early, and Embraer continues to live on thanks to explicit and implicit government support .... maybe Brazil should import Milei to run its government for a few years?
Very briefly, that's a hard calculation to make. Adding up the all the costs, up to and including the opportunity costs of having engineering talent devoted to the trio of Embraer, ITA and DCTA, and the comparing with the benefits, up to and including the development of said talent and positive externalities, is a exceedingly difficult task.
(Also, current levels of subsidies are, as far as I understand things, fairly small overall.)
Based on what I've read and understand, I think you're likely incorrect, that Embraer is a legitimate case of successful industrial policy that has benefited Brazil overall, significantly so.
That said, it should be very obvious from my post that I don't endorse a lot of such policies as a whole and there's plenty of other, obviously bad policies pursued by the Brazilian government.
Permanently low taxes to stimulate production is the one type of industrial policy I like. Trump listens to whatever crazy nonsense people like Navarro whisper into his ears, maybe someone can read him this post.
I’ve often wondered why it is that although Boeing and Airbus dominate the larger passenger jet markets, somehow Bombardier and Embraer dominate the regional jet market.
Developing a clean-sheet airliner is one of the most capital-intensive projects a company can take on. Had the 747 not been a hit, it would have bankrupted Boeing in the 70s. Airliner manufacturers can only take on so many projects, and the smaller manufacturers succeed by going where the larger players aren’t. Airbus bought Bombardier’s CS program and made it into the A220, and even this program was aimed at a niche that bridged the gap between the regional jets and smaller variants of the 737/A320 that weren’t economical to run. Note the poor sales of the A318 and the nonexistent similar size 737-MAX variants.
I mean, their latest product (the E2 series) is largely a commercial failure, with the E75E2 selling literally 0 airframes despite the popularity of its predecessor. So while I love Embraer aircraft, some series issues for the future
Old sailing friends had Brazilian connections. Their brother in law, a failed lawyer, got into selling mid America farmland. Selling to rich Brazilian farmers who were escaping from Brazil. The wife spent time with them and got tours of their farms in Brazil's Pantatal. It was one of their smaller farms at 20,000 acres.
All of Latin America have the same problem, even Chile is a bit underperformed compared to the GDP per capita. (Quite surprised that despite higher HDI compared to Brazil, Argentina is even worse in PISA!)
Really interesting. One thing that stands out to me with Embraer is how fortunate the timing seemed to be. It privatised basically right when the US regional plane market was undergoing this shift to jet-powered aircraft, opening up an opportunity that's pretty rare if you're an aerospace firm. Maybe if that change hadn't come around, Embraer would have sunk, but if Embraer hadn't privatised and the shift in the US market still took place, it would have continued plodding along, making crop dusters and Super Tucanos.
I guess this points to the importance of doing whatever you're doing, as long as the policy is right, at scale. The more firms you put in Embraer's position, the more likely you are to eventually have one.
I agree with a lot of this, indeed, it's a fundamental element in IO as I understand it, it's hard to disentangle how much "luck" a firm has had vs how much it's been "good". If I recall correctly, I once asked a fellow PhD student who specialized in IO about this and they basically said that, yeah, it's virtually impossible to tell them apart, they're typically grouped together because of this!
That said, making sure a firm is ready to take advantage of opportunities isn't easy. I.e., aside from the extra freedom afforded from the privatization, most of the fundamental elements were there, but it took a concerted effort to get Embraer (and ITA and DCTA) to that state.
Well at least they made the right decision to outsource their jet engines and not try to develop their own. Jet engines are key and hard to design and manufacture, as evidenced by the trouble China, India and Japan have in developing theirs.
Construction Physics had a great piece on this topic recently.
https://www.construction-physics.com/p/why-its-so-hard-to-build-a-jet-engine
Great article and a very interesting publication. Thanks !
Regional jets are disproportionately responsible for airport congestion, which would be far less problematic if regional flights either reverted to prop planes (with their different traffic patterns), or replaced two or three regional jet flights with a single 737 or A320 flight.
If the US had decided to fight airport congestion (and thus flight delays) by punitively taxing jets of less than 100 seats then Embraer would have been far less successful.
Prop planes are unpopular for a reason: noise, cramped seats and stowage and turbulence from flying at low altitude. Airport congestion could be solved for all jets with a modern GPS air traffic control system that allows closer spacing between aircraft.
What do propeller planes have to do with airport congestion? Using shorter runways?
Airports charge landing fees and terminal usage fees. I think that's the way to incentivize efficient usage of airports rather than taxes. Regional jets also enable routes to smaller cities, which has positive social and economic externalities, so the animosity towards them seems a bit odd to me.
Shorter runways and lower traffic pattern speeds allowing closer spacing.
And wouldn't higher airport fees for regional jets be just the privatized version of the punitive taxes that I was positing?
This was such a great piece. I’m a Brazilian subscriber, and I have to say—anytime I see the words “industrial policy” and “Brazil” together, there’s this automatic cold shiver. It’s hard not to flinch. The track record is mostly a catalog of expensive failures—big dreams, strange incentives, and a lot of political inertia dressed up as vision. The Zona Franca is the perfect case: something that looks like success on a map but feels, in every practical sense, like a policy held together by lobbying muscle and sheer habit.
Embraer, really does stop you in your tracks. It’s so rare to see a Brazilian industrial project that worked—really worked—and not just as a domestic pet project, but as a global player. The ecosystem around it—ITA, DCTA, São José dos Campos—almost feels accidental, like a pocket of institutional competence that managed to escape gravity. What struck me most is how export pressure and technical seriousness did the work that protectionism alone never could. It’s a real reminder that industrial policy can work, but only if it’s disciplined by reality.
Thank you, Pedro—this was incredibly thoughtful and deeply satisfying to read. And thank you, Noah, for hosting it. Pieces like this remind me why I subscribed in the first place.
Thank you! Very sincerely, really appreciate the very kind comments.
And yes, I agree with you overall. Brazil's Industrial Policy is littered with failures... the attempt at creating a computer hardware manufacturing industry being a particularly absurd example, as I wrote above. And import substitution lead Brazil down a path that it's never really managed to completely "escape", even if things are, in some ways, better.
Why Embraer succeeded, despite all I wrote above, remains <almost> a conundrum to me. As, the individual elements are clear, but why were prioritized (compared to other cases) and coalesced so well in this case? Was it the fact that it was a semi-independent, military-run institution? The initial boost from copying MIT? It's really not obvious, because, by all rights, Embraer should not be a technological manufacturing powerhouse that it is and understanding the "soft elements" (i.e., the culture) that allowed it flourish could be invaluable for Brazil.
This is a great piece! Thanks, Pedro. Where is Embraer at now, and has this helped be en example for Brazil to shape a new age IP?
Reminds of friend's stories of their experiences in Brazil.
One, a college prof, was there to study the cement industry. He found that the cost of a yard of concrete in Brazil was the same as in the US. Labor costs in the US were higher but machinery was used where in Brazil manpower was just thrown a the job.
The other, was in the Peace Corps trying to teach Brazil how to steal Silly Con Valley technology. His wife was in the Corps too, but in Brazil, middle class women don't work so she got to stay home and watch the construction of a hospital across the street. Every morning hundreds of workers would arrive. Over the two years they were there, there was no apparent progress on the hospital. That was back in the 60's/70's.
" but this is Brazil we’re talking about: whenever a certain privilege is granted by government to a group, that group will fight tooth and nail to keep it."
it's not just Brazil where that happens...
Nothing's so permanent as a temporary government program
Thank you Pedro for this great article! Unfortunately, the example of Manaus here is too common among countries using import substitution industrialization, and industrial policy could incentivize countries to build/subsidize industries in suboptimal places.
Argentina is a good example though - they built various tariffs and non-tariff barriers to protect their electronic manufacturing in Tierra del Fuego (which is just doing final assembly for electronic goods imported from overseas). Even Vietnam has same problems with building oil refineries - we chose to build 2 in the Central region, faraway from the oil wells in the South. It turns out that these refineries could not work much with our oil, and we have to import crude oil from Saudi Arabia and Kuwait!
Thank you!
And yes, I largely agree. Far too often, import substitution (and industrial policy) results in these half-formed clusters that are trying to achieve political goals, but without the care and planning needed to make them fully realized or, even worse, they are fundamentally unsound and result in costly "successes". I should have mentioned the example of the Tierra del Fuego example, it's very similar in that respect to the Manaus case!
Also, an unfortunate truth is that for each industrial policy that succeeded (Four Asian Tigers), we have several cases where it failed; and many of them in developing countries like in sub-Saharan Africa: https://www.youtube.com/watch?v=ZUBXW6SjuQA&pp=ygUYbmV3YWZyaWNhIGdlb3JnZSBheWl0dGV5
(The author here uses "socialism" pretty loosely though, perhaps a better way is "state interventionism", or as you said, "industrial policies"!)
Thank you for your comment!
I think the Tierra del Fuego case is even more nonsense than Manaus; after all Manaus is a big city by itself, has easy access to the ocean by the Amazon (even though it is deep inland), and building infrastructure there helped to develop Brazilian hinterland further (though as you said, the benefit is questionable). Meanwhile Tierra del Fuego is just in the middle of nowhere ("the end of the world"), few infrastructure there even in modern day, and population is very low (still the least populous province in Argentina).
I am worrying that given Trump's preference to pork-barreling (channeling money to swing states), we could see the same thing happens in the US, and even worse; with factories promised but never built.
P/s: I am surprised to see the disparities between Rio and Sao Paulo in 1950 compared to other states of Brazil; even though it was a federation, was everything just channelled to these two states before? Why the Southern states (Parana, Santa Catarina and Rio Grande do Sul) were still so poor compared to these 2 states, despite high European immigration there?
And a more important question, do you think that the liberalization/"neoliberal" wave in the 1980s-1990s broke the economic development of Brazil? Some Brazilians online told that due to privatization, Brazilian elites switched from maintain an industrial base to return to an extractive economy, and with the industrial know-how lost, it lost the opportunity to be like South Korea!
A bit briefly and to answer to your PS.
1 - I'm not 100% sure, but I believe that São Paulo state had the biggest industrial base in the 1950s, which helped it have a relatively high GDP per capita at that time. Rio also had a large base and also benefited significantly from being the capital of Brasil at the time. No other states had as large industrial base at that time.
So, to answer your question directly, Rio did benefit a lot from resources being channeled there, yes, but São Paulo not so much. One interesting thing is that the Brazilian federal government was relatively weak and total gov spending was low at that time; even after the Vargas' dictatorship, each state's government spending was probably more important than federal spending again, barring Rio (and, later, Brasilia).
2 - That's such a tricky question, something for a proper, long post. There <may> be something to an argument like that, but I doubt it played a large role compared to other factors. Instead, I'd guess that the fact Brazil was never well integrated into complex supply chains (as far as I can tell) and the rise of China played much, much larger roles. But this is just off the cuff.
Thank you for your answer! I think the second one is particularly relevant, as many countries in sub-Saharan Africa did try to open their economy for foreign investments in the 1990s, yet backlash from the people ended up leading to riots and push investment to China and Southeast Asia (this has been covered in The Bottom Billion book by Paul Collier: https://en.wikipedia.org/wiki/The_Bottom_Billion )
I think Brazil, even though not suffered from the same kind of political instability (no, Collor or Lula were not that chaotic), could not compete with China during the opening times as well, and ended up rely on resource exports.
I am looking forward for your post about Brazilian industrialisation though! One thing struck me about Brazilian economy is that the country always relies on resource exports (first brazilwood, then sugar, then gold, coffee, rubber and now soybeans, petroleum and iron ore); and industrialisation started very late (from the 1930s, even though Brazil received quite a lot of British capital before!)
Would you be able to explain why Brazil (and Argentina) industrialized so late, and when they did it they had to use heavy-handed state-led development? Some people said that was because of late abolition of slavery, some said that was because later immigration compared to the US, and some even blamed that was due to the lack of high-quality coal!
I'm not planning on writing a post on Brazilian industrialization for now, although it is an interesting topic and it would be fun to do so at some point.; I like the suggestion. It's a long topic, though.
Briefly, your suggested answers are probably a part of it. I'd also add the perennially tricky issue of institutions, the issue of education and lack of technical know-how. Obviously, slavery plays a significant role in explaining all three!
"I'm not planning on writing a post on Brazilian industrialization for now" - As a Brazilian and a Noah's subscriber, I'd really like that!
Great article, I couldn't stop reading once I started. Thank you!
Thank you!
“ was dominated by inefficient turboprop planes in the early 90s and fuel-efficient jets were primed to take over.”
Minor bit…That’s not quite correct. Turboprops are more efficient in the role of regional aircraft than jets. The issue with turboprops is that consumers think they are unsafe and that they offer a substantially inferior passenger experience. It’s also true that to be most efficient turboprops would need to operate at lower altitude and slower speeds. Which passengers also hate. You can try and fly them higher and faster but then the efficiency advantage disappears.
95% of the issue is if Delta Connect offers an E175 passengers will opt for that in droves if American or United are offering Dash-8 or in the old days SAAB turboprops.
Good point. I'm not an aviation expert, but from what I understand, that sounds correct to me, that if operated at comparable levels, the jets win out, but not necessarily otherwise.
I wasn't really considering this.
Really interesting, I really appreciate the post, Pedro! I'm an aerospace engineer and have always been curious about how Brazil came to have a successful airplane manufacturer in an industry which only has a few companies left after consolidation.
Thank you!
In case anyone is interested, I have a new post on tariffs and industrialization on my own Substack:
https://economicsfrankly.substack.com/p/trump-tariffs-and-industrialization
Sorry for the self-plug!
Great article Pedro.
As a follow up, I’d suggest your view on EMBRAPA, Esalq, and their role in agriculture in Brazil. One could argue it’s another industrial policy success — if you consider agriculture an industry.
I wonder if the continuous subsidies (or investments) by the government were compensated for by the profits minus losses incurred over the years. Would Brazil have been richer had it leased jets from abroad and invested the subsidies etc.. in Treasury Bills.... I suspect Brazil has been subsidizing world travelers for a long time...it certainly lost money more years than it made money but the total amount is hard to ascertain as financial information is sketchy.... The difference between Bombardier and Embraer is that Canada cut the cord early, and Embraer continues to live on thanks to explicit and implicit government support .... maybe Brazil should import Milei to run its government for a few years?
Very briefly, that's a hard calculation to make. Adding up the all the costs, up to and including the opportunity costs of having engineering talent devoted to the trio of Embraer, ITA and DCTA, and the comparing with the benefits, up to and including the development of said talent and positive externalities, is a exceedingly difficult task.
(Also, current levels of subsidies are, as far as I understand things, fairly small overall.)
Based on what I've read and understand, I think you're likely incorrect, that Embraer is a legitimate case of successful industrial policy that has benefited Brazil overall, significantly so.
That said, it should be very obvious from my post that I don't endorse a lot of such policies as a whole and there's plenty of other, obviously bad policies pursued by the Brazilian government.
Permanently low taxes to stimulate production is the one type of industrial policy I like. Trump listens to whatever crazy nonsense people like Navarro whisper into his ears, maybe someone can read him this post.
I’ve often wondered why it is that although Boeing and Airbus dominate the larger passenger jet markets, somehow Bombardier and Embraer dominate the regional jet market.
Developing a clean-sheet airliner is one of the most capital-intensive projects a company can take on. Had the 747 not been a hit, it would have bankrupted Boeing in the 70s. Airliner manufacturers can only take on so many projects, and the smaller manufacturers succeed by going where the larger players aren’t. Airbus bought Bombardier’s CS program and made it into the A220, and even this program was aimed at a niche that bridged the gap between the regional jets and smaller variants of the 737/A320 that weren’t economical to run. Note the poor sales of the A318 and the nonexistent similar size 737-MAX variants.
I mean, their latest product (the E2 series) is largely a commercial failure, with the E75E2 selling literally 0 airframes despite the popularity of its predecessor. So while I love Embraer aircraft, some series issues for the future
Check out Feynman's visit to Brazil: https://enlightenedidiot.net/random/feynman-on-brazilian-education-system/
He got a dose of Samba while there.
Old sailing friends had Brazilian connections. Their brother in law, a failed lawyer, got into selling mid America farmland. Selling to rich Brazilian farmers who were escaping from Brazil. The wife spent time with them and got tours of their farms in Brazil's Pantatal. It was one of their smaller farms at 20,000 acres.
I think that apart from higher literacy rate (and educational attainments), Brazil is still performing badly in education; its PISA score is in the lower half of countries being assessed by the OECD: https://worldpopulationreview.com/country-rankings/pisa-scores-by-country
All of Latin America have the same problem, even Chile is a bit underperformed compared to the GDP per capita. (Quite surprised that despite higher HDI compared to Brazil, Argentina is even worse in PISA!)