The Political Economy of Trade Reform in Emerging Markets

The Political Economy of Trade Reform in Emerging Markets

Crisis or Opportunity?

Edited by Peter Draper, Philip Alves and Razeen Sally

This timely book brings fresh analysis to the important issue of trade policy reform in emerging markets.

Chapter 6: Brazil

Mario Marconini

Subjects: economics and finance, international economics, political economy, politics and public policy, political economy

Extract

Mario Marconini INTRODUCTION This chapter probes Brazil’s trade policy reforms – one of the most crucial areas in Brazil’s economic policy framework – with a view to putting them in perspective at a particularly auspicious moment in the country’s history. World trade has been bullish for a number of years and Brazil, alongside many of its competitors, has benefited significantly from it. The question remains, however, whether good regulations, intelligent reforms, and relatively young but important institutions can survive changes to these global conditions – a question which itself raises a number of other questions. Has significant reform in fact taken place? If so, how, and to what extent? Is additional reform needed now, and in what respect? Additionally, is Brazil in a position to enact new reforms, or has complacency set in? What are some of the lingering problems and possible solutions? HISTORICAL PARAMETERS After decades of industrial policy and protectionism, changes in trade policy began to become inevitable in the late 1970s, as the widespread import substitution system was beginning to break down. The country had gone through two major oil crises, with a consequent substantial reduction in public savings – from close to 8 per cent of GDP in the beginning of the 1970s to close to zero in 1983–85. During the first years of the 1980s, Brazil would go through a major recession, and imports would decline consistently due to the devaluation of the exchange rate and the imposition of import controls. Even in the most internationalized sectors, imports...

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