INTERNATIONAL ECONOMICS

Introduction of global market of Brazil.

Global market opportunities in a country A to be discussed.

1.     Demographic and Economic Characteristics of a country that you chose (Brazil)

Population change

GDP change

GDP per Capita change

(tips: IMF, World Economic Outlook Database and US Census Bureau, international database)

2.International Trade Regulations

2.1Tax system

2.2Tax on imported goods

2.3Tariffs

2.4Quotas

3.1 Historical Trade Patterns with specific countries in specific industries

3.2 Comparative advantages

4. Analysis of market opportunities and challenges for future

5. conclusion

6. References

Running head: GLOBAL MARKET OF BRAZIL 1

GLOBAL MARKET OF BRAZIL 4

BU532 International Economics

Prof.: Dr. Kim, Rachel

Global Market of Brazil

Bruna Martins

Southern States University

Global Market of Brazil

Introduction

Brazil is characterized by being1one1of1the1top1ten1largest1economies1in1the1world, being at number nine. The country also has the eighth largest purchasing power parity. Brazil has a mixed economy, which relies on import substitution so that it can achieve economic growth. The growth domestic product (GDP) of Brazil is $1.868 billion as of 2018 and a GDP per capita of $9,703.17. Brazil1has1a1population1of1211 million1people1with1an1annual1growth1rate of 0.73%. It has a large population with a rank of six in the world. There are various demographic and economic characteristics of Brazil as compared with other nations in the world.

Population

The population of Brazil is one of the demographic factors of the country. Having a population of 211,899,591 people, the country sits at position six in the world ranking of the largest populations. The country covers an area of 8,515,767 km2 which can be regarded as large. This creates a population destiny of 24.96/km2, although the population is highly concentrated in the urban areas. The1largest1city1in1the1country1is1Sao Paulo, which houses more than 11.9 million residents and a further metropolitan population of 21.1 million. Brazil experiences a growth rate of 0.73% annually.

Demographics

The demographics in Brazil are diverse. Census in the region showed that the Brazilians are comprised of white1(48%), brown1(44%), black1(7%), yellow1(0.5%) and indigenous (0.25%). The main1religion1in1Brazil1is1Christianity with over 90% of the population being catholic. This makes them have the largest catholic population in the world at 123 million people. The Brazilian men have a life expectancy of 71.6 years while that of women is 78.8 years. This means that the Brazilian people will have greater demands on healthcare and their pensions in the years to come. On the other hand, the median age of the population is 32 years while 62% of the population is below 29 years.

Economic Development

Brazil has experienced some changes in its GDP. The GDP of the country stands at 1,868 billion US dollars as of 2018. The value of the GDP represents 3.01% of the world economy. Between the years 2000 and 214, Brazil1experienced1a1period1of1economic1and1social progress.1This progress was due to various factors that had happened in the economy such as, 29 million people1had1left1poverty1and the inequality had significantly declined. Also, the1income level1of1the1poorest140% in the country increased by 7.1%. Though during the period, Brazil experienced slow economic growth

There was a1phase1of1depressed1economic1activity1in1the1country, which was observed from the beginning of the decade. From 2006 up until 2010, there was a record of 4.5% growth rate of the economy. The growth rate started to decline between 2011 and 2014 with a record of 2.1% growth rate. This was followed by a significant contraction of the economy in 2015 and 2016. The reason for the decline in economic development were several. Falling of commodity prices was one of the reasons, which was coupled by the1country’s1limited1ability1to1carry1out fiscal1reforms. Recovery of the economy was experienced in 2017 with a growth of 1.1% which tricked into 2018.

References

Brazil Population 2020. (2019). Retrieved from

http://worldpopulationreview.com/countries/brazil-population/

In Grivoyannis, E. C. (2019). International integration of the Brazilian economy.

Overview. (2019). Retrieved from

https://www.worldbank.org/en/country/brazil/overview

Research and markets: Tomorrow’s brazil examines how brazil’s population will change between 2008 and 2028. (2009, Apr 23). M2 Presswire Retrieved from https://search.proquest.com/docview/444282530?accountid=151051

TRADE IN BRAZIL 2

BU532 International Economics

Prof.: Dr. Kim, Rachel

Brazil’s International Trade Regulations

Bruna Martins

Southern States University

Running head: TRADE IN BRAZIL 1

Brazil’s International Trade Regulations

The international trade patterns and compositions started to witness many shifts at the dawn of the 21ST Century, especially due to the evolution in the process of economic evolution. Consequently, the scope of cross-border trading has become more complex and wider. The implication is a multi-layered relational framework that links foreign direct investment, the support services of core activities of companies, and international trade as a result of fragmentation of production in terms of tasks and its global value chains’ geographic dispersion.

Consequently, the traditionally more closed Brazil’s economic policies have begun to shift. Brazil began to open its trade and investment regime policies since its last economic depression and recession about six years ago (Oliveira, 2017). The result include a decentralized but more market-driven environment via prices and state monopolies deregulation, privatization and privatization, and liberalization of investments. Furthermore, the World Trade Organization (WTO) reports that greater flexibility and improved resource allocation have enabled the Brazilian economy to deal with unfavorable internal and external shocks thus facilitate a rapid financial recovery (World Trade Organization, 2000).

The transformation has come with much opportunity. Market-set exchange rate has enabled the country to decrease, or alleviate measures that initially caused the restriction of supposed exports or imports and create a definitive departure from all forms of formerly protective trade policies. The progressive policies have fostered an undistorted balance between export and large domestic offer, and achieve and sustain greater economic growth through its offer of a positive strategy towards the realization of such opportunities.

The foreign direct investment (FDI) FOR Brazil has continued to exponentially increase since1996, surpassing US$30 billion in 1999 due to its stimulation of privatization (World Trade Organization, 2000). Brazil’s internal market is very attractive, has reflects a better share to MERCOSUR markets’ access, and has an enhanced policy environments’ market orientation. Brazil remains the largest country in Latin America, and the second largest in the Western Hemisphere, only after the United States of America. Furthermore, it remains the largest exporter of several agricultural products and produce in the world, including sugar, orange juice, and coffee. The European Union (EU), MERCOSUR (including Argentina and Uruguay) are the leading markets for Brazilian products, while the leading suppliers to Brazilian markets include Argentina, United States, and EU, in increasing order (World Bank Organization, 2020). For instance, according to the US Census Bureau, Brazil has had a net import and export totals of US$ 181,230,498.36 and US$239,887,754.93, respectively, thus leading to a positive trade balance of US$ 58,657,256.58 (in thousands), with the US (United States Census Bureau, 2019).

Foreign trade in Brazil is governed by many resolutions, decrees, provisional measures, and laws which are also frequently amended. However, international trade regulations in the country are very complex (Ayub, 2017; Novatrade, 2016). Non-residents are exclusively taxed at source based in their Brazilian-sourced income whereas residents the taxation of residents is based on their worldwide income (International Living, 2020). The main trade instrument in Brazil is tariffs computed through a plan which converges or leans the Common External Tariff (CET) of MERCOSUR (World Trade Organization, 2000). Furthermore, the country adopted a computerized system for customs clearance, or SISCOMEX to simplify its custom clearance (Australian Trade and Investment Commission, 2020). The other import policies include the contingency measures like anti-dumping laws and automatic import licenses for trade law monitoring and statistical purposes.

Brazil regularly uses export promotion policies. The practice aids the country to offset its domestic inefficiencies like overvalued exchange rates, cascading tax system, inefficient financial intermediation, and poor infrastructure. As a founding member of the WTO, Brazil upholds the five basic principles of global trading systems, including safety valves, transparency, enforceable and binding commitments, reciprocity, and non-discrimination. However, the European Commission has recently reported that Brazil has resorted to several potentially trade-restrictive measures.

Its domestic market is protected using applied customs duty averaging at 13.5% (European Commission, 2019). The tariff and non-tariff barriers inhibits open and stable regulatory environment for foreign traders and investors. However, Brazil sees the trade protection policies to cause the consumption of Brazilian products and produce within the local market (International Monetary Fund, 2019). The country is however opening up and implementing newer international trade regulations that would open up the Brazilian market to more global trade.

References
Australian Trade and Investment Commission. (2020). Doing Business – Tariffs and Regulations – Brazil – For Australian Exporters. Retrieved February 4, 2020, from Australian Government: https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Brazil/Doing-business/Tariffs-and-regulations
Ayub, C. (2017, January 4). Brazilian Trade Regulations ‘Too Complex’. Retrieved February 4, 2020, from World Finance: https://www.worldfinance.com/strategy/legal-management/brazilian-trade-regulations-too-complex
European Commission. (2019, May 7). Brazil – Trade – European Commission . Retrieved February 4, 2020, from European Commission: https://ec.europa.eu/trade/policy/countries-and-regions/countries/brazil/
International Living. (2020). Taxes in Brazil. Retrieved February 4, 2020, from International Living : https://internationalliving.com/countries/brazil/taxes/
International Monetary Fund. (2019, March 18). Trade’s Impact on Brazil’s Industries. Retrieved February 4, 2020, from IMF Blog: https://blogs.imf.org/2019/03/18/chart-of-the-week-trades-impact-on-brazils-industries/
Novatrade. (2016, September 16). Import Duties and Taxes in Brazil. Retrieved February 4, 2020, from Novatrade: https://www.novatradebrasil.com/en/brazil-import-guide/import-duties-taxes-brazil/
Oliveira, S. E. (2017, February 1). Brazil in the Twenty-First-Century International Trade: Challenges and Opportunities. Retrieved February 4, 2020, from IntechOpen: https://www.intechopen.com/books/international-trade-on-the-brink-of-change/brazil-in-the-twenty-first-century-international-trade-challenges-and-opportunities
United States Census Bureau. (2019). Foreign Trade: US Trade in Goods with Brazil . Retrieved February 4, 2020, from United States Census Bureau: https://www.census.gov/foreign-trade/balance/c3510.html
World Bank Organization. (2020, February 4). Brazil Trade – Data. Retrieved February 4, 2020, from World Integrated Trade Solutions: https://wits.worldbank.org/countrysnapshot/en/BRA
World Trade Organization. (2000, November 4). Trade Policy Reviews: First Press Release, Secretariat and Government Summaries – Brazil: November 2000. Retrieved February 4, 2020, from World Trade Organization: https://www.wto.org/english/tratop_e/tpr_e/tp140_e.htm

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-11-2012-0027

https://b111f2gf7-mp01-y-https-search-proquest-com.proxy.lirn.net/docview/2083739910/fulltext/EF3F8BD9E47F406EPQ/4?accountid=151051