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This article analyzes the Brazilian scenario of production and consumption of nitrogen and phosphate fertilizers, in light of the concept of powershoring and global geoeconomic transformations. The research, of a qualitative and descriptive nature, is based on a bibliographic review and documentary analysis, focusing on Brazil's external dependence in the agricultural input chain. The results indicate that, although the country is among the world's largest consumers of fertilizers, its domestic production is insufficient, generating high exchange rate and geopolitical vulnerability. The study highlights strategic opportunities for attracting foreign investment, especially in the North and Northeast regions, due to the availability of critical minerals, renewable energy and emerging logistics infrastructure. The performance of companies such as Yara, EuroChem, Atlas Agro and Galvani is examined as an example of industrial reorganization driven by the sustainability agenda. The conclusion is that Brazil can reposition itself as a hub for sustainable fertilizer production, provided it invests in long-term policies, expands production capacity and enhances the value of its geographic and energy assets. Key words: Fertilizers; Geopolitics; Powershoring; External dependence

This paper assesses Latin America and the Caribbean’s (LAC) preparedness to take advantage of potential shifts in the structure of global value chains (GVC). We start by unpacking and examining the main drivers of change in global trade and investment flows, focusing on technology, sustainability, and geopolitics. In each area, the paper analyzes the likely implications for investment and sourcing decisions in the context of GVCs, identifying several channels through which each broad driver is likely to shape GVCs in the future. This discussion highlights diverse and, in some cases, countervailing impacts on global trade, adding nuance to existing debates over deglobalization or nearshoring. Drawing on this conceptual framework, we develop a new set of preparedness indicators for GVC participation and compare LAC’s performance to the Organization for Economic Cooperation and Development (OECD) and Association of Southeast Asian Nations (ASEAN). The region lags behind on technology-related indicators but appears to be well positioned to take advantage of sustainability and geopolitical drivers.

Recent political, health, environmental, and economic disruptions are expected to lead to significant changes in current global value chain (GVC) trade arrangements. In this paper, we focus on Brazil as a potential new location for industrial plants and services activities in the context of a reshaping of the global value chains architecture. We explore hard data as well as qualitative information obtained through interviews with CEOs and managers of firms established in Brazil in several sectors. The results of the analysis suggest that the permanence of high trade costs faced by firms makes it very difficult to think of Brazil as an immediate option for the relocation of industrial segments of GVCs. However, the ongoing changes in the productive processes throughout the world, chiefly among them the transition to a low carbon economy and secondarily the huge technological changes led by digitization, offer a unique opportunity for the country. In particular, the country’s comparative advantages in natural resources and the clean energy matrix may position Brazil as a desired location for firms in search of a clean, secure, and affordable supply of energy. To benefit from these transitions, however, Brazil needs to put in place reforms and policy actions to remove some key obstacles. Some of these actions involve the energy sector, addressing the distortions in the regulatory framework and in the formation of energy tariffs and the overlapping of institutional functions. Finally, key elements of the policy agenda are the improvement of the business environment and the reduction of trade costs and the high level of protectionism still adopted in Brazil.

The transition toward a low-carbon economy has been reshaping industrial location strategies and production chains, increasing the relevance of renewable energy availability, innovation, and decarbonization to industrial competitiveness. In this context, powershoring emerges as a dimension associated with the territorial reorganization of production and the emergence of green industrial chains in Brazil. The general objective is to analyze how powershoring, innovation, and decarbonization contribute to the emergence of green industrial chains within Brazil’s new industrial geography. The research is qualitative and was conducted through a literature review and documentary research, which made it possible to connect scientific production with evidence found in institutional and technical documents addressing powershoring, innovation, renewable energy, and industrial decarbonization. This approach enabled the integration of different analytical perspectives and the compilation of the theoretical and documentary elements necessary to understand the relationships among energy, innovation, sustainability, competitiveness, and the reorganization of industrial activities in the Brazilian context. The results indicate that powershoring can influence new industrial location decisions in territories endowed with renewable energy resources and adequate infrastructure, while technological and organizational innovation contributes to transforming these conditions into productive capabilities, efficiency, and value creation. The findings also indicate that decarbonization requires coordination among energy efficiency, renewable energy, innovation, industrial policy instruments, and institutional coordination, potentially contributing to sustainable competitiveness and strengthening green industrial chains. The integration of these dimensions indicates that the energy transition can extend beyond the replacement of energy sources and contribute to the reorganization of production systems and the repositioning of Brazilian industry within global value chains.

Objective: This study aims to analyze research on the “powershoring” strategy within a global context. Methodology/Approach: The study is applied, with a qualitative approach and a descriptive-exploratory character, combining a narrative literature review with bibliometric analysis. The former, being more flexible, is justified by the scarcity of studies on the topic, while the latter provided methodological rigor in the selection of publications, as well as the construction of an integrated theoretical-empirical basis on the phenomenon analyzed. Originality/Relevance: The study explores "powershoring" as a managerial strategy, a recent and underexplored topic both academically and globally. By focusing on its application within the Latin American context, this research addresses gaps related to the adoption of innovative strategic models for sustainability. Key Findings: The "powershoring" strategy positions countries with abundant natural resources and access to renewable energy as key players in the global economy. However, the success of such partnerships hinges on the development of integrated policies that safeguard the legitimacy of resource-supplying nations while ensuring effective collaboration. Academic Contributions: This study advances theoretical and empirical understanding of management practices rooted in sustainable mechanisms. It emphasizes the strategic importance of cooperation between emerging economies and other nations, driven by geopolitical shifts and the search for renewable energy sources. Furthermore, it underscores the relevance of aligning global frameworks with localized business strategies to support the implementation of the Sustainable Development Goals (SDGs).

n a trend called powershoring, energy-intensive industry will locate closer to renewable energy sources, driven by cheap renewable energy (which is difficult to transport), and the need to decarbonise. Regions’ renewable energy resources and industrial capabilities shape the types of energy-intensive industries they can attract: some regions are best placed to produce very energy-intensive commodities (like green steel and green ammonia), while other regions are best positioned to host more complex industries that still require good clean energy supplies (like battery manufacturing or datacentres). Similarly, some powershoring industries have many spillovers and open up new pathways for regional economic growth, while other energy-intensive industries have fewer spillovers or open up fewer development pathways. This contribution explores these trends to help policymakers develop contextually aware powershoring strategies that can catalyse their best opportunities for economic development.

Documento analítico e propositivo organizado em sete capítulos, iniciando pela explicitação do conceito de Powershoring, para, em seguida, desembarcar no Nordeste. Identificando traços relevantes da realidade regional, com destaque para a evolução recente de sua socioeconomia, ressalta a liderança nordestina na produção de energias renováveis e os avanços na produção industrial e de serviços tecnológicos. Explicitam-se avanços realizados e discutem-se riscos e oportunidades a eles associados.

The process of global decarbonization offers significant growth opportunities for Hermosillo, given its outstanding solar power potential. As fossil fuels are relatively cheap to transport, they created an “energy flat world,” allowing industries to thrive in locations that are far away from energy sources. Renewable energy, however, is much more costly to transport. Because of this, energy-intensive industries are naturally incentivized to relocate to areas with competitive green energy in a decarbonizing world ––something known as “powershoring.” Powershoring is a green growth opportunity for Hermosillo; that is, a pathway for Hermosillo to accelerate its own economic growththrough helping the global economy to decarbonize. Powershoring is becoming an increasingly important opportunity as businesses face carbon taxes and other costs inconsuming fossil fuel energy, which come from both regulators and consumers. Hermosillo’s powershoring strategy should involve both attracting new industries and exploring new growth opportunities for existing industries. On the intensive margin of existing industries, companies may expand by integrating renewable energy into their own consumption of renewable sources. Hermosillo can build on its strengths in the food and agricultural sectors. On the extensive margin of new industries, attractive opportunities arise in the chemicals manufacturing cluster, the glass and ceramics cluster, and the semiconductors and electronics cluster. The industries identified in these clusters can be targeted for potential investment promotion efforts, given their large energy demands. In this report, we provide initial observations on several of these industries from an investment promotion perspective. To establish Hermosillo as a prime destination for industries seeking lower emissions, government and industry must work together on long- and short-term strategies. A significant obstacle is the intermittency of solar energy, which is subject to weather variability and the unavoidable reality that the sun does not shine at night. A current approach by companies is to use energy from the grid in combination with green energy certificates to offset resulting carbon emissions, but this practice is untenable for some end consumers. Over the longer-term, intermittency could be resolved through advances in battery storage and connections to neighboring regions, where wind power and other complementary renewable energy can be sourced. Since decarbonizing the grid is a long-term scenario, early movers can capitalize on opportunities through green industrial parks that provide a dedicated supply of renewable energy. The region’s energy infrastructure will need to evolve to ensure stability, but the short-term focus should be on industries that align with Hermosillo’s existing capabilities and renewable potential. Prioritizing sectors where processes are more easily electrified, and water needs are manageable appears to be the most logical place to begin a dynamic process of attracting and growing powershoring opportunities in Hermosillo.

The global Green Hydrogen economy offers the opportunity to unleash a new global energy paradigm, and a new virtuous cycle of global sustainable economic growth and development. The Green Hydrogen economy addresses the urgent need for global decarbonization, addressing a number of the Sustainable Development Goals (SDGs) established in the 2030 agenda. This paper addresses the promises and challenges permeating the establishment of a global Green Hydrogen economy. This paper introduces two new approaches and concepts, Green Powershoring and Green Watershoring, to assess and analyze how the global Green Hydrogen will evolve, and which countries will take the leadership in the global Green Hydrogen economy. Given the renewable energy-intensive and fresh water-intensive nature of green hydrogen production, countries which are more endowed with these natural resources will develop a clear lead and a competitive advantage over countries that do not possess these natural resource endowments. Thus, the creation of a global Green Hydrogen Divide is inevitable, leading to a number of global geoeconomics and geopolitical consequences.

The Blue Economy offers a new paradigm and a new virtuous cycle of sustainable economic growth and development. The Blue Economy’s equitable, inclusive, intergenerational perspective on sustainable growth and development has the potential to grow considerably in the next decades. Thus, addressing a number of the Sustainable Development Goals established in the 2030 agenda. This paper addresses the Brazilian Blue Economy and its economic, social, and environmental potential. Brazil’s Blue natural capital assets offer Brazil a unique opportunity to capitalize on its Blue Powershoring and Blue Watershoring natural competitive advantages. Moreover, Brazil’s Blue Powershoring and Blue Watershoring competitive advantages position Brazil as a premier location for the production of Green Hydrogen, which will allow Brazil to enhance its global economic competitiveness by expanding its exports of green hydrogen and green hydrogen-intensive products and services.

In 2023, Export Processing Zones (EPZs) are playing a very meaningful role in promoting exports, attracting foreign direct investment, and creating employment opportunities in more than 150 countries around the globe. EPZs have been important players in fostering the extraordinary growth and expansion of the global supply and value-added chains, further integrating the global economy. Brazil is a latecomer in adopting this tool and strategy of trade and investment promotion and liberalization. This paper addresses the global EPZ experience and discusses Brazil’s latest policies and procedures to expand the role of EPZs in Brazil’s foreign trade policy. This paper introduces the concept of Green Powershoring stressing the increasing importance of EPZs embracing the UN’s 2030 Sustainable Development Goals. This paper also addresses Brazil’s unique position in offering multinational companies moving into Brazilian EPZs the opportunity to benefit from the country’s clean and renewable energy matrix and Brazil’s abundant fresh water reserves, another key resource for manufacturing. Thus offering companies established in Brazilian EPZs additional ESGs competitive advantages. Thus, Brazilian EPZs are well positioned to benefit from the green power shoring economy permeating new trends in global foreign trade and global foreign direct investment.

A transição energética global representa uma oportunidade histórica para o Brasil transformar sua matriz elétrica limpa e seu vasto capital natural em poder produtivo, tecnológico e geoeconômico. O artigo analisa como essa transformação pode ser estruturada por meio de uma política industrial verde, inspirada em estratégias como a chinesa, que articula inovação, financiamento e planejamento estatal. O Brasil possui vantagens comparativas significativas, como energia renovável abundante e minerais críticos, mas enfrenta desafios como a exploração predatória de recursos e ausência de coordenação estratégica. A proposta inclui o desenvolvimento de setores como hidrogênio verde, siderurgia limpa, biocombustíveis avançados e mobilidade elétrica, além da criação de cadeias industriais completas e mercados robustos de ativos ambientais. A transição energética, se bem articulada, pode reverter a desindustrialização, reduzir desigualdades regionais e posicionar o país como líder na nova geoeconomia verde.

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This policy paper explores opportunities for strategically positioning resource – and energy-abundant economies within low-carbon global supply chains. By leveraging comparative advantages in natural assets and clean energy, these countries can attract investments in energy-intensive sectors and low-carbon technologies. Realizing this potential requires integrated public policies, including technical training, regulatory harmonization, and trade facilitation. Such economies are well-placed to assume leadership roles in emerging green industrial dynamics. Achieving this will depend on effective collaboration between governments, the private sector, and civil society.

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This paper identifies the main barriers to access the necessary resources for the production of green manufacturing in Latin America and the Caribbean (LAC), discusses instruments to overcome these challenges, and offers suggestions for advancing the design, formulation, and implementation of powershoring promotion actions in the region. Initially, we analyze ongoing initiatives for transitioning to a low-carbon economy worldwide, highlighting the specificities of LAC. The analysis of the Brazilian case offers a plausible scenario for transitioning to a net-zero greenhouse gas emissions economy based on the use of already available technologies. This case study allows us to identify the main global and domestic facilitators for decarbonizing LAC. Next, we present the concept of powershoring, which refers to the decentralization of production to countries near consumption centers and that offer clean, safe, cheap, and abundant energy, among other virtues for attracting industrial investments. We assess its potential contribution to the region's economy, including its repercussions on domestic and regional value chains and the type of integration of the region into the world economy, as well as its contribution to achieving the Sustainable Development Goals. Finally, we discuss strategic aspects of formulating a roadmap for powershoring in LAC, which includes various normative and regulatory measures, industrial policy instruments, and financing and resource mobilization. The main conclusion of the paper is that it will be essential to reduce risks and establish partnerships between public and private capitals to advance powershoring in Latin America and the Caribbean.

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How to Lead the Sustainability Agenda? For a long time, high economic growth has been the objective of economic policy in Latin America and the Caribbean (LAC). However, the region's per capita GDP grew modestly by 0.9% per year on average from 1980 to 2021, with a standard deviation of 2.6%. In other words, we have experienced the undesirable combination of low growth with high volatility, which limits the possibilities for improving quality of life. To break away from this supposed fate, it will be necessary, among other things, to promote economic activities in which the region has a comparative and competitive advantage and that generate many high-quality jobs. One of these bets is the sustainability agenda, but from a perspective that goes beyond adaptation and mitigation. After all, LAC can dare due to its unparalleled natural and biological wealth. However, all this wealth has been underutilized as a platform for promoting development. How to move forward? Among the most promising paths are scientific and technological development, innovations and new business models associated with sustainability, and so-called sustainable finance.

The report analyzes the Powershoring strategy as a development opportunity for Latin America and the Caribbean, focusing on Brazil, Chile, Colombia, and Uruguay. The document examines how the region's comparative advantages in clean and renewable energy production can attract energy-intensive industrial investments. Beyond offering green, secure, and affordable energy, the report demonstrates that these countries meet conditions of simultaneity and complementarity in clean energy production at competitive costs, positioning them as ideal destinations for investments based on this business location strategy.

A transição energética global está reorganizando a geografia da produção industrial e abrindo uma janela estratégica para regiões com abundância de energia limpa. O Nordeste brasileiro reúne condições excepcionais para se tornar um hub global de powershoring, atraindo cadeias industriais intensivas em energia de baixo carbono. Se bem coordenada, essa estratégia pode representar a maior oportunidade contemporânea de promover na região um desenvolvimento amplo, inclusivo, sofisticado e ambientalmente responsável. Contudo, os benefícios não são automáticos: a sua materialização depende de forte coordenação institucional, governança regional eficaz e capacidade estratégica de integrar energia, indústria, infraestrutura e capital humano.

A mudança do clima e a agenda global de sustentabilidade estão provocando uma transformação estrutural profunda na economia mundial. Mais do que uma questão ambiental ou regulatória, trata-se de um choque econômico persistente que altera preços relativos, padrões de investimento, organização das cadeias produtivas, critérios de acesso a mercados e condições de financiamento. Energia limpa e previsível, eficiência no uso de recursos naturais, gestão de riscos climáticos e conformidade ambiental passaram a influenciar diretamente a competitividade das empresas e dos territórios. Para as micro, pequenas e médias empresas (PMEs), essa transformação impõe desafios relevantes, mas também abre oportunidades econômicas significativas. As PMEs são estruturalmente mais vulneráveis a choques climáticos, financeiros e regulatórios, em razão de sua menor escala, menor capacidade de diversificação e acesso mais restrito a capital, tecnologia e informação. Ao mesmo tempo, são atores centrais da economia brasileira, respondendo por parcela expressiva do emprego, da renda e da dinâmica produtiva local. A forma como esse segmento se insere na transição climática terá impactos diretos sobre crescimento econômico, coesão territorial e inclusão produtiva. O relatório parte do reconhecimento de que a mudança do clima deve ser entendida como um choque econômico estrutural e cumulativo, com efeitos persistentes sobre produtividade, custos operacionais, previsibilidade e risco. Eventos climáticos extremos, volatilidade no fornecimento e nos preços de energia e água, impactos sobre logística, produtividade do trabalho e acesso ao crédito afetam de maneira desproporcional as PMEs, sobretudo em territórios mais vulneráveis e em setores intensivos em recursos naturais. Esses efeitos microeconômicos, quando agregados, têm implicações macroeconômicas relevantes, podendo reduzir o crescimento, ampliar desigualdades regionais e aprofundar a heterogeneidade produtiva. Ao mesmo tempo, o relatório demonstra que a sustentabilidade pode e deve ser tratada como estratégia econômica racional para as PMEs. Investimentos em eficiência energética, energia renovável distribuída, economia circular, adaptação produtiva e inovação aplicada frequentemente apresentam retorno econômico positivo, reduzem custos, aumentam previsibilidade e mitigam riscos. A queda acelerada dos custos de tecnologias renováveis e de eficiência reforça essa lógica, independentemente de motivações ambientais. 5 Sustentabilidade, Mudança do Clima e Oportunidades Econômicas A sustentabilidade, nesse contexto, deixa de ser custo ou obrigação e passa a ser vetor de produtividade, resiliência e competitividade. O relatório destaca ainda o papel estratégico do capital natural como ativo econômico. A crescente mensuração e precificação, ainda que implícita, de recursos naturais e serviços ecossistêmicos está criando novos sinais de mercado, oportunidades de negócio e formas de geração de renda. Essas oportunidades são particularmente favoráveis às PMEs, por sua natureza intensiva em serviços, conhecimento local e atuação territorial, abrindo espaço para soluções baseadas na natureza, agricultura sustentável, serviços ambientais e atividades associadas à bioeconomia. Outro eixo central da análise é o powershoring, entendido como a reorganização da geografia produtiva global em torno da disponibilidade de energia limpa, previsível e de baixo custo. O Brasil, dada sua matriz elétrica majoritariamente renovável e seu abundante capital natural, encontrase bem posicionado nesse processo. As principais oportunidades para as PMEs associadas ao powershoring ocorrem por meio de encadeamentos produtivos, integração a cadeias de valor descarbonizadas e prestação de serviços vinculados à transição energética e industrial verde. No campo do financiamento, o relatório evidencia o paradoxo do financiamento climático: embora existam volumes expressivos de recursos globais, o acesso efetivo das PMEs permanece limitado. O principal gargalo não é a escassez de recursos, mas falhas de transmissão, ausência de instrumentos adequados, dificuldades de preparação da demanda e elevados custos de transação. Nesse contexto, instituições intermediárias desempenham papel crucial na organização da demanda, na redução de riscos e na tradução da agenda climática em decisões microeconômicas viáveis. Com base nessas análises, o relatório propõe um Plano de Ação para o Sebrae estruturado em eixos que tratam sustentabilidade como produtividade, promovem a integração das PMEs a cadeias de valor sustentáveis, exploram a economia circular como estratégia territorial, difundem inovação aplicada e organizam o acesso ao financiamento climático. A principal conclusão é que a sustentabilidade não deve ser vista como agenda normativa, mas como componente central de uma estratégia econômica de longo prazo para as micro, pequenas e médias empresas e para o desenvolvimento produtivo do país.

O artigo argumenta que o hidrogênio verde representa oportunidade estratégica para o Brasil apenas quando integrado a uma agenda de industrialização verde, e não como nova commodity de exportação. Embora o país detenha vantagens estruturais, como energia renovável abundante, território, portos e potencial competitivo de H2V, a exportação da molécula enfrenta limitações econômicas, financeiras e físicas, além de gerar encadeamentos produtivos restritos. A tese central é que o maior retorno econômico advém do uso doméstico do H2V como insumo para cadeias industriais intensivas em energia e difíceis de descarbonizar, como aço, alumínio, fertilizantes e combustíveis sintéticos. Integrado ao powershoring, o hidrogênio pode ampliar valor adicionado, emprego qualificado, arrecadação e inserção comercial em mercados de baixo carbono, fortalecendo resiliência econômica e competitividade internacional.

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As global energy markets shift, Latin America has a rare opportunity to leverage its resources, renewable energy and geopolitical stability to strengthen its place in the emerging economic order.

This article explores how international trade can accelerate global decarbonization and reduce its costs. It proposes integrating the concepts of green comparative advantage (Le Moigne, 2023) and powershoring (Arbache, 2022). Powershoring refers to the relocation of energy-intensive industrial sectors seeking to decarbonize to regions with abundant and competitively priced renewable energy. This integration enables global carbon arbitrage, optimizing geographic specialization and reducing transition costs, particularly in hard-to-abate sectors. The article demonstrates that eliminating tariff and non-tariff barriers to green goods and services, along with reducing regulatory fragmentation, could expand green production and exports, thereby significantly reducing global emissions. Countries endowed with exceptional renewable resources can leverage and industrialize their green comparative advantages, generating millions of jobs, accelerating technology transfer, curbing green inflation, boosting industrial competitiveness, and promoting inclusive economic development. The article calls for coordinated policies, harmonized taxonomies and standards, and the creation of integrated green hubs. Strategically structured trade can be an exceptionally efficient mechanism for accelerated decarbonization—delivering corporate, economic, social, and environmental benefits.

International trade can act as a powerful yet underused accelerator of global decarbonization. By exploiting green comparative advantages and the transitional strategy of powershoring—relocating energy-intensive industries to renewable-rich regions—countries can reduce emissions rapidly and at lower cost. This geographic optimization of decarbonization lowers corporate risks, strengthens value chains, sustains employment, and supports climate goals while domestic infrastructure expands, delivering immediate, scalable climate benefits.

The industrial transition is moving too slowly not because the world lacks ideas, technologies, or capital, but because too many low-carbon projects cannot secure credible demand. Renewable-rich developing economies can produce green iron, low-carbon aluminium, sustainable aviation fuels, fertilizers, and other inputs with lower emissions and often lower costs. Yet fragmented standards, defensive subsidies, local content rules, and uncertain market access make these projects hard to finance. This article argues that next generation trade arrangements should move beyond broad promises and create product-specific green corridors. These corridors would connect comparative advantages across countries through mutual recognition, common carbon accounting, long-term offtake, development finance, shared infrastructure, and domestic value-capture commitments. The objective is to organize value chains so that the transition becomes cheaper, cleaner, more investable, and more politically feasible for advanced and developing economies alike.

The global increase in energy demand and the reconfiguration of industrial value chains have created a strategic imperative to pursue renewable and competitive energy sources. In this context, Brazil's Northeast stands out due to its vast potential for renewable energy generation (wind, solar, and biomass), which, if effectively leveraged, can transform the region into a powerful engine of economic development. This article explores the concept of powershoring, defined as the attraction of energy-intensive industries, along with their value chains, to locations close to abundant and cost-competitive renewable energy sources. We analyze the region's opportunities and structural bottlenecks and propose powershoring as a robust development strategy. Finally, the study discusses the role of regional stakeholders as facilitators and outlines a short-, medium-, and long-term roadmap for implementing a green industrial ecosystem, aiming to establish the Northeast as a global hub in the low-carbon economy.

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Brazil faces slow and volatile economic growth, compounded by low productivity and structural challenges such as deindustrialization, weak competitiveness, and demographic change. In this paper, Jorge Arbache and Aldemir Drummond analyze the factors that constrain the country’s development and propose pathways to accelerate and scale economic growth. Drawing on the industrialization of comparative advantages and strategic integration into global value chains, the authors discuss how Brazil can build a more innovative, competitive, and sustainable model for the future.

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This paper argues that the global energy transition represents a fundamental physical and economic rupture with the fossil-fuel era. For over a century, industrialization and globalization were organized around the transportability of fossil energy, which allowed production to become geographically separated from energy sources. Renewable energy changes this logic. Electricity cannot be globally traded like oil, while hydrogen and its derivatives face major transport, infrastructure, and conversion constraints. As a result, energy-intensive production increasingly tends to move toward regions with abundant, reliable, and low-cost clean energy. The paper examines how this transformation reshapes industrial location, trade, value chains, relative prices, and development opportunities, particularly for renewable-rich developing economies seeking to industrialize their natural and energy advantages.

Decarbonization is reshaping the structure of relative prices across the global economy. As clean energy, natural capital, and location-specific assets become dominant inputs in energy-intensive industries, the relative cost of producing lowcarbon goods is increasingly determined by geography. Under undistorted conditions, this structural transformation should redirect investment toward renewable-rich economies where production is cheaper and emissions intensity lower. Yet this reallocation remains incomplete. This paper argues that two systematic distortions explain the divergence. First, industrial policy interventions — subsidies, tax credits, trade barriers, and certification systems — disconnect effective prices from underlying structural costs, redirecting investment toward structurally inefficient locations. Second, institutional failures in certification, procurement, and standards create demand uncertainty that leaves otherwise competitive projects unbankable. Together, these distortions generate static misallocation, slower technological learning, higher fiscal burdens, delayed emissions reductions, and suppressed industrial opportunities in developing economies. This paper is part of a broader research agenda on powershoring and green comparative advantage, which argues that decarbonization is not only a technological transition — it is a spatial and price reorganization of global production.

Europe’s industrial decarbonisation is constrained by a structural mismatch: the geography of renewable energy endowments no longer aligns with energy-intensive manufacturing. As electrification accelerates, high domestic electricity costs, grid congestion, and permitting bottlenecks threaten European industrial competitiveness. This paper argues for a paradigm shift from territorial selfsufficiency to value-chain optimisation through "powershoring." This strategy entails relocating electricity-intensive upstream production (e.g., green hydrogen, primary metals) to renewable-rich partner regions, while retaining high-value, knowledgeintensive downstream manufacturing within Europe. To operationalise this, we recommend that the EU: (1) shift industrial policy from a plant-level to a value-chain perspective; (2) transform the Carbon Border Adjustment Mechanism (CBAM) from a defensive tool into a platform for low-carbon integration and mutual recognition; (3) harmonise MRV and certification standards, ensuring flexibility for grids already dominated by mature renewables; (4) deploy blended finance to de-risk cross-border green industrial corridors; and (5) prioritise resilience through strategic diversification rather than inefficient domestic duplication. By embracing strategic interdependence, Europe can simultaneously accelerate global decarbonisation, lower system-wide costs, and secure its long-term industrial competitiveness.

This chapter argues that the global transition to low-carbon energy is not only an environmental, technological, or financial process. It is also a transformation in the spatial foundations of growth. As clean electricity, water, land, minerals, biodiversity, logistics, carbon intensity, and trusted measurement systems become central production inputs, geography is re-entering development economics through a new channel: the revaluation of climate-era assets and locations. For Brazil, this revaluation creates an unusually important but conditional development opportunity. The country has renewable electricity, biomass, land, water, biodiversity, mineral resources, agricultural capabilities, industrial experience, and geopolitical room for strategic bargaining. Yet these endowments will not automatically generate structural transformation. They must be converted into effective competitiveness, investable value-chain positions, domestic capability accumulation, and broadly shared productivity gains. Building on the agenda on powershoring, the geography of decarbonization, green comparative advantage, green corridors, and North-South integration, the chapter develops green comparative advantage as a dynamic and institutionally mediated development asset. It integrates insights from classical trade theory, structuralism, economic complexity, green industrial policy, and the literature on global value chains. It then proposes a Brazilian strategy centered on industrializing comparative advantages rather than merely exporting natural-resource rents or subsidizing fashionable sectors. The central policy implication is that Brazil's development challenge is not to choose between reform and industrial policy, or between climate ambition and growth. It is to build the institutions, standards, finance, skills, and territorial systems that allow climate-era scarcity to become productive capability.

The energy transition is advancing rapidly in technology deployment and investment, yet too slowly in the displacement of carbon-intensive systems. This paper explains that divergence as a political-economy problem of allocation. Decarbonization revalues assets, regions, skills, and national comparative advantages; it therefore changes who earns rents, who bears adjustment costs, and where production takes place. Building on the carbon-lock-in, industrial-policy, climate-coalition, and global-value-chain literatures, the paper develops a double lock-in framework. A domestic incumbency lock channels policy support toward established assets, firms, and industrial regions, even when alternative configurations offer lower long-run abatement costs. An international demand-access lock raises the cost and uncertainty faced by low-carbon projects in renewable-rich economies through fragmented standards, contingent market access, domestic-production preferences, and weak offtake formation. The locks reinforce each other: restricted entry protects incumbents, while incumbent-centered policy sustains defensive trade and regulatory regimes. The paper introduces a risk-adjusted definition of the protectionism premium and derives observable propositions concerning project bankability, publicsupport allocation, and value-chain reorganization. Evidence from recent global investment and emissions trends, low-emissions hydrogen, European industrial policy, and Brazil illustrates the mechanisms. The paper argues that the politically feasible escape is not a binary choice between brownfield adaptation and greenfield transformation. It is a value-chain strategy—operationalized through product-specific green corridors—that connects renewable-rich upstream investment to incumbent downstream capabilities, disciplines support through performance criteria, and creates coalitions for a faster, lower-cost, and more development-compatible transition.

The global energy transition is reshaping the geography of industrial production. As electricity, hydrogen, and other low-carbon inputs become more important, differences in renewable-resource endowments, delivered energy costs, and embedded carbon intensity increasingly affect where value-chain stages can be produced competitively. This paper argues that industrial decarbonization should therefore be analyzed at the level of value chains rather than individual plants or entire sectors. It develops the concept of tradeenabled carbon arbitrage (TECA), which occurs when cross-border reallocation of electricity-intensive production stages reduces both delivered production costs and verified embedded emissions. The argument recognizes that geopolitics, strategic autonomy, supply-chain security, and employment concerns now shape industrial investment decisions. It does not propose North-South integration as the only solution to these pressures. Rather, it argues that integration should be part of a broader portfolio of decarbonization, security, competitiveness, and development strategies. Building on green comparative advantage and powershoring, the paper shows how TECA can lower systemic decarbonization costs, protect downstream employment by improving input competitiveness, create new industrial jobs in renewable-rich economies, and make all sides better off when gains are organized through green corridors and coordinated industrial policy.

The global economy is undergoing a profound structural transformation. Climate change, geopolitical fragmentation and rapid technological change are not temporary shocks but enduring forces that are reshaping production, trade and investment. For emerging and developing economies (EMDEs), this transformation is creating new challenges and opportunities for growth and investment. Brazil’s exceptional structural endowments – clean energy, natural capital, agricultural capacity, critical minerals and relative geopolitical neutrality – are no longer passive advantages. They can be actively mobilised as asset-instruments to attract investment, drive structural transformation and generate inclusive growth by industrialising comparative advantages. Using these assets, Brazil can pursue an investment-led development path. Fiscal adjustment is necessary but not sufficient, and consumption-driven growth alone is unlikely to deliver the productivity gains and structural transformation required for sustained development. By industrialising Brazil’s comparative advantages, this strategy places the creation of productive, formal and higherquality urban employment at its core, with potential implications for the country’s persistent challenges of inequality, reliance on informal employment and low productivity in a predominantly urban economy. Because such employment is rooted in real cost advantages and integration into global value chains, social progress may become a by-product of structural transformation rather than redistribution alone. Growth, fiscal sustainability and the climate transition can, therefore, become mutually reinforcing rather than competing objectives. This approach does not imply a relaxation of fiscal or monetary discipline, but rather a recalibration of policy priorities to align with an investmentled growth path. The strategy relies on a targeted set of policy instruments to crowd in private investment, including foreign direct investment (FDI). These instruments include catalytic public spending through, for instance, the strategic use of green funds to leverage investment in infrastructure and resilience; parafiscal and development finance instruments, such as public guarantees, blended finance, and derisking mechanisms such as foreign exchange hedging; and a stable, credible macro-financial framework that lowers risk premia and the cost of capital. At its core, the strategy combines gradual fiscal consolidation with measures to mobilise private capital. Higher levels of investment are expected to support productivity growth and economic expansion, helping lower risk premia and real interest rates over time. Ultimately, this will improve debt sustainability through a more favourable interest rate-growth differential. These measures are complemented by a selective industrial policy and investment facilitation agenda focused on valuechain integration, regulatory clarity and strategic openness. The objective is to transform Brazil’s natural and productive endowments into bankable investment opportunities capable of attracting large-scale domestic and foreign private capital. The analysis also recognises that regulatory uncertainty, bureaucratic complexity, infrastructure bottlenecks, and implementation challenges remain significant constraints on investment. Therefore, improving regulatory quality, legal predictability and public–private coordination will be essential to mobilising capital at scale. Nonetheless, there are political economy challenges associated with implementing the reforms required for this strategy to succeed. In particular, progress will depend on addressing the long-standing distortions captured by the notion of custo Brasil – the inefficiencies and structural barriers that increase the cost of investing, producing, exporting and doing business in Brazil. Beyond these well-known constraints, the transition raises broader political economy challenges regarding how resources are allocated between decarbonising existing industries and accelerating investment in new low-carbon activities. Both objectives are important, but they often involve different interests, incentives and policy priorities. A successful transition will depend on the ability to balance these goals, preserving economic value and employment while creating the conditions for new sources of competitiveness and growth to emerge. Current global macroeconomic conditions create a favourable backdrop for an investment-led growth strategy. Global investment in the low-carbon transition exceeded US$4 trillion in 2024 and could reach approximately US$5.6 trillion annually under net zero pathways during 2025–30 (BloombergNEF, 2025). Based on sectoral allocations across net zero transition scenarios, an estimated US$600–800 billion annually may be directed towards energy-intensive and trade-exposed sectors such as steel, chemicals, fertilisers, fuels and industrial materials, sectors in which Brazil has significant comparative advantages. Even a modest capture of these flows could raise annual GDP growth by around 1–1.5 percentage points over the medium term, generating sustained gains in exports, fiscal revenues and formal employment. At the same time, changes in the global risk landscape, with narrowing spreads between EMDE and advanced-economy assets, may create additional opportunities. As uncertainty rises in advanced economies, including countries traditionally seen as providers of safe assets, global investors are reassessing risk and portfolio allocations. This could create a window for countries such as Brazil to benefit from a relative repricing of risk and attract larger volumes of long-term capital. A successful implementation of the strategy could also support the recovery of Brazil’s investment-grade status. This status is not an end in itself but would reflect improved growth prospects, stronger institutions and enhanced macroeconomic credibility. In turn, it would broaden access to long-term capital, reduce borrowing costs and reinforce the investment and growth dynamics at the heart of the strategy. The costs of inaction could be substantial. Without a credible fiscal adjustment anchored in an investment-led ecological transformation, Brazil risks becoming trapped in a cycle of high debt, high interest rates, low growth and recurrent cost-push inflation, while facing rising fiscal pressures from increasingly frequent and severe climate-related shocks. At the same time, it could miss a huge opportunity to attract large-scale domestic and foreign investment associated with the ecological transition.

Decarbonization is reconfiguring global relative prices. As clean energy, natural capital, and location-specific assets become dominant industrial inputs, the relative cost of producing low-carbon goods is increasingly determined by geography. Two systematic distortions explain why the expected reallocation of investment toward renewable-rich economies remains incomplete. First, industrial policy interventions, including subsidies, trade barriers, and certification systems, disconnect effective prices from underlying structural costs. Second, institutional failures create demand uncertainty that leaves structurally competitive projects unbankable. Together, these distortions generate static misallocation, leading to slower technological learning, higher fiscal burdens, delayed emissions reductions, and suppressed industrial opportunities in developing economies. This paper is part of broader research on powershoring and green comparative advantage, which focuses on the idea that decarbonization is a spatial and price reorganization of global production, in addition to a technological transition.

The ecological transition is reshaping the geography of industrial production by creating new comparative advantages based on renewable energy, sustainable biomass, critical minerals and other low-carbon resources. While Global Value Chains successfully organized production under the previous era of globalization, they provide limited guidance for coordinating industrial specialization under net-zero constraints. This paper introduces Green Corridors as a product-specific institutional architecture for organizing cross-border low-carbon value chains. We develop the Green Corridor Design Framework, a six-stage methodology that begins with market opportunities, maps value chains, allocates production according to comparative advantages and constructs the institutional and commercial arrangements required to mobilize investment. The framework is illustrated through two contrasting applications—a Brazil–Germany Green Iron Corridor and a Brazil–Europe Sustainable Aviation Fuel Corridor—demonstrating its applicability across distinct industrial ecosystems. The paper further argues that Green Corridors address not only coordination failures but also one of the central political economy constraints of industrial decarbonization. By concentrating cooperation on narrowly defined products and value chains, they facilitate coalition-building, reduce collective-action problems and create more politically feasible pathways for international industrial cooperation than broad multi-sector agreements. Green Corridors are therefore presented not simply as a policy instrument, but as an emerging institutional architecture for organizing cross-border industrial decarbonization in the net-zero economy.

This paper argues that much of the current literature on green industrial policy, geoeconomic fragmentation, and clean energy supply chains misinterprets the structural transformation underway. While existing frameworks emphasize market failures and technological externalities, they overlook how subsidies, protectionism, and regulatory interventions distort relative prices—particularly for energy, carbon, water, land, and critical minerals. As a result, observed price signals fail to reflect underlying scarcities and costs. These distortions lead to global misallocation of capital, as firms and policymakers respond to artificial incentives rather than true comparative advantages. The paper contends that this omission prevents the literature from fully recognizing the scale and direction of industrial relocation already emerging. It proposes an alternative framework centered on geography, natural capital, and value-chain reorganization. From this perspective, the energy transition is fundamentally a spatial reallocation of production. Concepts such as powershoring and carbon arbitrage become central. Aligning investment with undistorted relative prices is essential to accelerate decarbonization and improve global efficiency. The analysis builds on a broader body of work developed by the author in recent years.

The transition to net zero is creating one of the largest investment and business agendas in modern economic history. Yet its development effects will be highly uneven. The theory's driving force is a persistent increase in the relative value of selected climate-era assets and production locations compared with carbon-intensive alternatives. This paper advances a conditional theory for a subset of developing economies whose specific bundles of renewable resources, low-carbon grids, minerals, water, ecosystems, land, climate, carbon-storage geology, and strategic location are becoming more valuable as climate policy, technological change, and geopolitical fragmentation alter relative prices and the geography of production. These structural assets do not automatically produce development. They create an option that must pass through three conversions: from endowment to effective competitiveness, from competitiveness to investable value-chain location, and from investment to domestic capability accumulation and sustainable value capture. The framework integrates green comparative advantage, powershoring, trade-enabled carbon arbitrage, nature-based solutions, green corridors, and the industrialization of comparative advantages. It gives particular weight to standards, certification, taxonomies, measurement, reporting and verification, and mutual recognition, which can either create trusted markets or operate as powerful non-tariff barriers. It also makes employment, skills, productivity, SME linkages, and formalization explicit conversion variables: human-capital shortages can constrain investment, while weak supplier diffusion can turn a capital boom into an enclave. A formal framework shows how energy and carbon advantages can be neutralized by capital costs, policy support abroad, market-access uncertainty, and compliance wedges, and how project attraction may coexist with green primarization. The paper concludes that the relevant objective is not to maximize green exports or projects, but to transform increasingly scarce climate-era assets into knowledge, productive capabilities, better work, resilient ecosystems, and diversified prosperity while preserving the natural capital on which the strategy depends

The ecological transition is creating new opportunities for cross-border industrial specialisation. Electricity-intensive upstream stages can increasingly be located in renewablerich economies, while downstream manufacturing, engineering and market integration remain close to advanced industrial centres. This paper argues that such green corridors require a new form of coordinated industrial policy. It also challenges a common diagnosis of projects located in Brazil: high domestic interest rates need not be the decisive obstacle when export revenues, senior debt and strategic equity can be denominated in euros. The relevant localcurrency exposure is concentrated in construction, local procurement, taxes and part of operating expenditure, and can be addressed through a Brazilian-real tranche supported by BNDES and the risk-mitigation architecture of Eco Invest Brasil. The binding constraint is instead governance. Fragmented standards, certification, carbon accounting, market-access rules and other non-tariff barriers prevent long-term offtake agreements, converting regulatory uncertainty into revenue risk and revenue risk into financing risk. Building on powershoring and Green Corridors, the paper proposes product-specific Brazil–Europe Corridor Compacts, operating beneath broad trade agreements and drawing on the European Union’s Clean Trade and Investment Partnership model. These compacts would align regulators, firms, financiers and buyers around investable value chains in critical minerals, green iron, low-carbon metals, clean fuels and other strategic sectors.