Economic complexity, skills, and racial inequality in Brazil

Research on structural transformation with equity has a longstanding tradition in Brazil. However, only recently have new methods from relatedness and economic complexity research been employed to reveal smart and inclusive diversification strategies at the regional level. Here we demonstrate how these methods can help identify significant challenges and opportunities that have largely been overlooked in Brazil. Firstly, we illustrate that the traditional emphasis on exports may underestimate Brazil’s actual productive capabilities, skills, and diversification opportunities. A more comprehensive perspective encompassing all sectors is necessary. Secondly, policy emphasis at either the national or federal state level may overlook significant diversification opportunities within Brazil’s heterogeneous microregions, thus perpetuating high levels of regional inequality. Thirdly, for inclusive growth in a highly unequal country like Brazil, sectoral innovation and industrial policies must explicitly consider workers’ skills and career paths. Workers cannot simply transition randomly into new occupations; rather, they are strongly constrained by their skill sets and associated job opportunities within their home region. Finally, an elephant in the room that cannot be ignored any longer for the sake of a dynamic learning society is the exclusion of Brazil's black population from a wide array of higher-status and knowledge-based jobs. Our results show that higher levels of regional economic complexity are not associated with substantially better jobs and salaries for black people in Brazil. Nevertheless, the good news is that new methods derived from relatedness research can inform the design of more targeted and inclusive growth policies, thereby empowering more individuals and regions.