Towards A New Global Competitiveness for Brazil
- Brazil
- 03/03/2011
Brazil finds itself amidst an atmosphere of risk and opportunity surrounding the global economy. Although certain, the recovery of US and European markets is slow. Depending solely on the growth of the so-called BRIC countries (Brazil, Russia, India and China) too risky. It is with this external environment that President Dilma Rousseff must give practical meaning to the continued expansion of the Brazilian economy and tackling the country’s huge social debt. Brazil’s option in recent years to favor its domestic market instead of an export-oriented approach has been praised as largely responsible for the unscathed manner with which the country went through the “Great Recession” that broke out in September 2008.
This has led some analysts in Brazil to conclude that the internationalization of the Brazilian economy is a mistake. Nothing could be further from the truth. China also dealt with the crisis successfully – and boasts 60% of its GDP related to international trade. Many believe the slim participation of Brazil in world trade (less than 1% of everything bought and sold worldwide) and of international trade in Brazil’s economy (only about 17% of GDP) is the result of protectionism in rich countries.
This injustice could only be corrected through negotiations of the “government-to-government” type, like the ones carried out between the European Union and Mercosur, or at the World Trade Organization (WTO). Undoubtedly, “government-to-government” negotiations are very important. Industries and products in which Brazil presents clear competitive advantages such as biofuels, steel and so many others depend largely on fairer trade rules.
However, there are decisions that are even more relevant than the outcome of those negotiations:
Does Brazil envisage foreign trade to be its main road towards a larger role in the global economy? Does Brazil want foreign trade surpluses to become the prime source for building up domestic savings and therefore necessary resources for investments?
If the answers to these questions are affirmative, asymmetries in international trade should not represent a “paralyzing excuse” for inaction in Brazil’s trade promotion efforts. Multilateral “government-to-government” agreements have not been the main reason why some emerging economies expanded exponentially in the past 30 years. South Korea, China and Chile have increased their national incomes dramatically without placing any emphasis on multilateral negotiations as the main element of their economic and business strategies.
Concentrating Brazil’s trade strategy in the pursuit of a “happy ending” for multilateral negotiations makes us lose focus. Brazil must replace simplistic notions such as “overseas markets might be of interest to Brazil if protectionist barriers are eliminated” by questions like “what is our trade promotion strategy in a world if trade rules remain unfair?”
Recent decades clearly show us that those countries that sought internationalization have been more successful than those dogmatically tied to their domestic market. Brazil must learn that lesson.
Alongside multilateral negotiations, Brazil must enact urgent labor, social security and tax reforms. In addition, however, there is a “quartet” of priorities:
- (i) facilitating domestic legislation for export-oriented firms;
- (ii) improving the country´s logistic infrastructure;
- (iii) training specialized human resources in both public and private sector for trade promotion and attracting FDI (foreign direct investment), and
- (iv) strengthening the international presence of small and mid-sized enterprises through the establishment of export consortia.
These are much-needed – and yet basic – steps towards a new global competitiveness for Brazil.
Marcos Troyjo is a political scientist, economist and diplomat. He is the founder of Brazil’s Center for Business Diplomacy and currently a guest researcher at University Paris V (Sorbonne). E-mail: [email protected]
This article was extracted from the magazine “The Perspectivist – Yale University Global 21”
