Bioeconomy as an Inducer of Economic Complexity and Industrial Competitiveness

The concept of economic complexity, developed by scientists César Hidalgo and Ricardo Hausmann from Harvard University, refers to a country's ability to produce a wide variety of goods and services by combining different skills and knowledge. To understand the concept, imagine an economy as a puzzle. Each puzzle piece represents a skill or knowledge necessary to produce a good or service. The more pieces a country has, the more complex its economy is.

Economies that are more complex create opportunities for synergies and cross-fertilization because the production of goods and services in different sectors can generate interdependencies and complementarities, creating opportunities for the emergence of new products and services. For example, the technology industry can benefit from the production of software, hardware, and electronic equipment, while the cosmetics industry can benefit from the production of natural raw materials such as essential oils, plant extracts, pigments, dyes, etc.

Economic complexity can be an important indicator of a country's competitive capacity and market reach. The creators of the concept developed a metric - the Economic Complexity Index (ECI) - that provides an estimate of a country’s competitiveness based on the quantity and diversity of products and services it exports. Countries with a high ECI produce a greater variety of goods and services, correlating well with the diversity of their industrial base and innovation capacity.

Countries with more complex economies tend to be more competitive and resilient, allowing them, for example, to promote the automation of their industries more rapidly or benefit more quickly from disruptive technologies such as artificial intelligence. South Korea is an example of a country that increased its economic complexity and became developed and internationally competitive in a relatively short time. The country invested heavily in education and training, infrastructure, innovation, and international integration, reaching the fourth position in the global economic complexity ranking (ECI) in 2021.

Countries with less complex economies, based on natural resources like Brazil - which held the 49th position in the ECI in 2021, may have a unique opportunity to increase their economic complexity and industrial diversity through bioeconomy. A new economic paradigm inspired by nature, bioeconomy utilizes biological resources, such as plants, animals, and microorganisms, to produce products and services as a solution for the sustainability of various industrial sectors, especially for replacing fossil and non-renewable resources.

The strengthening of bioeconomy arises from the global demand for sustainability, intensified by the climate crisis, the growing risk of health crises and pandemics, and worsening social inequality worldwide. It seeks the reconciliation between human systems and nature, consolidating the vision that economic prosperity must be associated with environmental and social improvement, and that the environment must be seen as a generator of new opportunities for growth and inclusion.

A recent study by the Brazilian Association of Bioinnovation (ABBI) in partnership with Embrapa Agroenergy, SENAI CETIQT, CNPEM/MCTI, and the Cenergia Laboratory of UFRJ revealed that bioeconomy could increase the Brazilian GDP by almost US$ 290 billion and reduce carbon emissions by around 550 million tons in the next 27 years. The economic and environmental potential of bioeconomy in Brazil is so significant that the study is being further explored, including emerging technologies, which could indicate even greater benefits and new opportunities for industrial diversification by 2030 and 2050.

Bioeconomy opens up multiple opportunities for agriculture, a sector historically associated with Brazil's low industrial complexity. Reversing this perception can be achieved through agriculture's ability to access natural resources efficiently, potentially inserting the country into sophisticated industrial sectors in food, fibers, energy, chemistry, materials, among others. Agriculture-associated biorefineries could feed a diverse natural-based industrial park, positioning Brazil as a producer of raw materials and renewable products, replacing a significant portion of what currently derives from oil.

The possibilities become even more fascinating when considering that Brazil has great potential for developing bioeconomy in synergy with the hydrogen economy, which is a promising future energy source due to being clean, renewable, and abundant. The country has a wide range of resources that can be used to produce green or renewable hydrogen from solar, wind, and biomass energy. The synergy between these two sectors can open opportunities for Brazil to lead the development of a diversified, low-impact bioindustrial base with great competitive capacity, in line with the global sustainability agenda.

Article originally published in the November 12, 2023 edition of the newspaper Correio Braziliense

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