INTERNATIONAL ECONOMICS

Running Head: BRAZIL HISTORICAL TRADE PATTERNS 1

BRAZIL HISTORICAL TRADE PATTERNS 5

BU532 International Economics

Brazil Historical Trade Patterns

Prof.: Dr. Kim, Rachel

Bruna Martins

Southern States University

Brazil is ranked position 22nd across the globe as the largest export economy as per Economic Complexity index. The country’s top exports are Soybeans, Iron Ore, Crude petroleum, Raw Sugar as well as cars. The major exporting countries are China, United States, Argentina, Netherlands and Japan. It’s main importing nations are China, United States, Argentina, Korea among other nations. The country experienced a 20% shrinking in the trade surplus to a tune of $ 46.67 billion for financial year 2019.

The recent shrank in international trading between Brazil and other nations was driven by strengthening domestic demand hence boosting the country’s economic growth rate to 2.3%. Consequently, the country has had higher imports compared to the exports in the recent times. The nation’s minister of Trade Ferraz allude confidence a balance between imports and exports would be attained.

The surplus were weakest in 2015 standing at $ 19.5 billion as a result of adverse economic recession in the country. In 2019, the demand for the Brazilian commodities faced the slowest global growth within the decade, several uncertainintites concerning the United States- China trade disputes. Moreover, the trading activity experienced political as well as economic turmoil in the latin America.

Argentina had a renewed slide into the economic as well as political crisis that significantly reduced the exports for manutactured goods to a tune of $ 5.2 billion in 2019. The trade actibity was also slowed by the outbreak of t6he African swine fever in the China market hence reducing the soy exports to a tune of $ 6.7 billion.

Brazil enjoys a comparative advantage in the international trade compared to other countries. For instance, United States has an absolute advantage in the production of the computers but Brazil enjoys a competitive advantage in the sector. Brazil has offered subsides to the computers manufactures to close to two-thirds the costs of producing in the United States. Consequently, the favorable terms attract potential investors to produce computers for ultimate export at a relatively cheaper costs of production.

The Brazilian foreign trade policy allows for increased imports while reducing on exportable products. At the beginning of 1990s, the country marked a significant shift in the foreign trade policy which included the liberation of the foreign trade attained through the reduction in import tariffs as well as the full implementation of MERCOSUR with primary objective of tackling globalization related problems. Consequently, the country was to increase the imports while attaining the balance of trade in 1996 of $ 5.5 billion and in 1997 at $ 8.4 billion. The country through the ministry of trade seeks not only to attain the balance of trade but also improve on the level of imports and exports of raw materials as well as capital goods. Therefore, the country geared on the selective imports to create a modern industrial sector in the country.

The country has a significant volume of direct foreign investment as evidenced in 1997 it was at $ 17 billion. However, the county’s foreign investment increased by $ 9.3 billion as in December 2019.

The Brazil foreign market has its own challenges and opportunities concerning the marketing of the products. The Export trade does not receive adequate support to accelerate its economic growth. The sector’s profitability reduced greatly as well as lack of credit facilities to the traders. The country faces adverse corruption activities hence hindering countries across the globe such as U.S. among others trading with Brazil. Brazil’s Currency fell in value hence assisted greatly in the export growth in the country. Moreover, more firms are also interested in investing in the country to drive the foreign business sector.

References

Keltner, B. (1995). Relationship banking and competitive advantage: Evidence from U.S. and germany. California Management Review, 37(4), 45. Retrieved from: https://b111f2gf7-mp01-y-https-search-proquest-com.proxy.lirn.net/docview/216150092/fulltext/5A557379474B4E24PQ/7?accountid=151051

International Trade Centre. (April 16, 2019). Exports of German automotive parts and accessories to the United States of America (USA) from 2015 to 2018* (in 1,000 U.S. dollars) [Graph]. In Statista. Retrieved February 06, 2020, from https://www.statista.com/statistics/824916/german-automotive-parts-exports-usa/ https://b113g2ggl-mp01-y-https-www-statista-com.proxy.lirn.net/statistics/824916/german-automotive-parts-exports-usa/

Wilson, T. L., Lindbergh, L., & Graff, J. (2014). 0RW1S34RfeSDcfkexd09rT2The competitive advantage of nations1RW1S34RfeSDcfkexd09rT2 20 years later: The cases of sweden, south korea and the USA. Competitiveness Review, 24(4), 306-331. doi:http://dx.doi.org/10.1108/CR-11-2012-0027https://b111f2gf7-mp01-y-https-search-proquest-com.proxy.lirn.net/docview/2083739910/fulltext/EF3F8BD9E47F406EPQ/4?accountid=151051