Nova Indústria Brasil: The Problems Brazil Faces while Executing a Bold Step Towards Smart Manufacturing.
Austin Freed | Kevin Daniel
Nova Indústria Brasil is said to be the fix to a technologically neglected economy that is in desperate need of transformational improvements towards smart manufacturing to make them a global competitor in manufacturing industries but can they pull it off? Brazil has a plan of investing $630.236 billion through the Nova Industria project, but it does not have the investment or speed to make it a global competitor. Nova Industria is a one-of-a-kind project in Brazil to boost the economy and modernize Brazil’s industries. The Nova Industria policy plans include five main missions: Strengthening agro-industrial chains, increasing health (increase in pharmaceuticals), improving the well-being of the urban population, digitally transforming Brazil’s industries, and lastly focusing on the bio-economy, decarbonization, energy transition, and security. The project was announced in January of 2024 with a timeline ending in 2033. The total investments for the project amount to $630.236 billion. $224.849 billion comes from the government, and $412.224 billion comes from private sector investments. The project only dedicates $34.964 billion to the mission of digital transformation in the manufacturing sector.
So what is smart manufacturing, and why is it important? Smart manufacturing is the use of AI, robotics, and cloud computing, among many other modern forms of technology, with the goal of manufacturing products faster and better. It is said by MIT and NetSuite that smart manufacturing is more reliable, much faster, and can adapt better to manufacturing demands. Smart manufacturing is also changing the game, with less time being spent on maintenance. This is made possible by the system’s ability to point out where the malfunction is happening or even point out a system failure before it happens. Overall, improving the industries of Brazil and making them much more competitive in the global market. The effects of smart manufacturing will be and have been seen already with increasing exports and growth in the economy. According to Brazil’s government, they saw a 3.1% increase in industrial production when the policies were put into place. This growth should continue as the project gets to the end of its completion and for years to come.
The program is starting to see funding issues that threaten its goals. The funding issues have the potential to move back project timelines, extending the time it takes to implement smart manufacturing. CPG Brazil reports that the New industry Brazil demands 13 times the amount of credit that they currently have. This is an important funding issue that will need to be solved for the project to continue its growth into the future. The government is also facing other financial pressures. As of June 2025, the inflation rate in Brazil was 5.35%. The ideal inflation rate that most countries try to achieve is a target of 2%. The Brazilian Central Bank is looking at a target of 3% inflation and may achieve this because the interest rate in Brazil is 15% according to the Brazilian Central Bank. This will slow the economy down there and bring inflation down, but the government will suffer from the high borrowing cost for banks, which can make it harder for the government to pay off some of its debt. They will also need to take on more debt for the project’s completion. The government is also facing high debt, with Reuters reporting that Brazil’s debt amounts to 78.1% of its GDP that, as recorded in 2025. This would be considered to be alarming or very close to alarming by many in the economic industry including by Goldman sack laid out in the same Reuters article. Fitch, a major credit rating agency, gives them a BB rating. This is below investment grade. This is not good for the country as it will make it harder for the country to borrow money. The higher the rating, the more trustworthy the country is in terms of paying its debt back. With Brazil’s rating being below investment grade, banks and other countries will think twice before loaning any money to the country. If they do, there will be a higher interest rate because it is risky for the bank or the country to lend its money to that country. All these economic stressors will prove to be difficult in the transformation of manufacturing in Brazil because it will make it harder for them to fulfill the credit deficit that is needed to continue. This deficit could push the deadline for the project back, and the technological transformation of the economy will be delayed.
The government plans to have 50% of the manufacturing industry transformed into smart manufacturing facilities by 2033. This timeline could be pushed back, given the economic pressures expressed above; however, the project currently remains on time. This plan can make Brazil a regional power in Latin America, but it will not be completed fast enough or to the extent needed to be a global power. The Brazilian Government has just recently started to focus on this type of technological advancement. Countries like China, the United States of America, and India had economies with 70%, 60%, and 58% of smart manufacturing use in their economies in 2023. The percentages listed above are higher than where Brazil plans to be in 2033, and those numbers were in 2023, according to SACA. This disparity in the economy’s technological readiness will not be filled with this plan; it simply moves Brazil in the right direction of technological advancement.
The economic pressures the Brazilian government faces, along with the funding shortages and the 2033 timeline, make it clear that Brazil will not be a global competitor in terms of smart manufacturing implementation into its economy, but can be a regional competitor. These findings also establish doubt in Brazil’s ability to complete these projects within its timeline. The government needs to think about its debt-to-GDP ratio, inflation, and fiscally responsible policy first before it can continue spending money on technological advancements in its economy.
Austin is a part of Columbia College’s class of 2029. He is planning on majoring in Political Science. His future goals include law school, though he has deep interest in international relations and economics. Austin is most interested in the emerging markets of Latin America and the Middle East.
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