Industrial Cores and Peripheries in Brazil



Chart 2 shows municipality-based concentration curves for industrial foreign trade (exports and
imports) for a set of 1000 major municipalities covered by each indicator, and compares them to the
concentration of population and the concentration of industrial activity based on the IVA. Distribution
of exports is quite similar to IVA distribution and both are more concentrated than distribution of
population. Distribution of imports per municipality is even more concentrated: 99% of all imports are
concentrated in the 400 municipalities ranked as top industrial importers.

Table 1 shows some figures about regional distribution of industrial activities that are indicative
of international insertion and concentration. IVA concentration is remarkable in the Southeast Region,
especially in the State of Sao Paulo. The flows of industrial foreign trade are even more concentrated in
these areas: the State of Sao Paulo receives more than 50% of all imports. The table also shows three
industrial location quotients, based on a classification that reflects the innovative capability and
competitiveness of each industry: firms which innovate, differentiate products, and are price
makers(A), firms that specialize in standardized products and are price takers (B), firms that do not
differentiate products, do not export, are price takers (C). In Brazil, 26% of all industrial value-added is
generated by firms type A, 66% type B and approximately 8% type C.3

The location quotients show regional concentration vis-à-vis the national average concentration.
The data show that the Southeast Region and the State of Sao Paulo are the areas with the largest
concentration of innovative companies (A), while type B and C companies prevail in the remainder of
the country. The coefficient of locational differentiation suggests that within each state and region the
distribution of industrial activity is heterogeneous. For instance, in the State of Sao Paulo industrial
spaces have a per capita income 68% higher than its non-industrial spaces, while in the Northeastern
Region this difference reaches 115%. Figure 1 shows the locations of municipalities with industrial
activity, highlighting industrial agglomerations in the State of Sao Paulo and in the South Region of
Brazil. The following section will attempt to map the main industrial agglomerations in Brazil, based
on the IVA and using the municipalities as an observation unit.

3 It must be stressed that the industrial databases used in this research understimate the importance of firms C in Brazilian
industry. The databases have information only about those companies with more than 20 workers, thus small firms that
respond for a significant share of industrial production are not included in the research. Thus, the reader should consider the
behavior of firm C as a proxy of local industrial production that do not reach international markets, are intensive in non-
qualified labor, and supply just regional markets.



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