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The Economies of Argentina and Brazil

The Economies of Argentina and Brazil

A Comparative Perspective

Edited by Werner Baer and David Fleischer

This book compares the successes and failures of the development and growth processes of Argentina and Brazil. It provides important insights into the different performances of these economies through a series of comparative essays written by Argentinian and Brazilian economists.

Chapter 23: Foreign Trade and Foreign Investments: The Brazilian Experience in the Last Two Decades

Simão Davi Silber

Subjects: development studies, development economics, economics and finance, development economics


Simão Davi Silber INTRODUCTION 23.1 The objective of this chapter is to analyze Brazilian trade and investment policy during the two decades to 2010 and its effects on trade performance, foreign direct investment (FDI), competitiveness and growth. It was a very rich period in terms of experiences that changed the profile of Brazilian economy, and one in which a more integrated world economy opened new trade and investment opportunities. It was also a turbulent period, with recurrent crisis in Mexico, Southeast Asia, Russia, Brazil and Argentina. The benefits of trade and investment liberalization were blurred by international crisis and inconsistencies in domestic macroeconomic policies. After 2002, the world economy boomed for 5 years, with important consequences for the Brazilian foreign sector. The country’s exports almost quadrupled, with important compositional and regional changes. The benefits of more trade and FDI appeared clearly and the country moved to a higher-growth-rate plateau. In a certain way, the twenty-first century resembles the nineteenth, with the most dynamic economies having a scarce endowment of natural resources and their growth irradiating to the world through increasing demand for staple, oil and mining products, and very favorable effects on Brazilian exports. This was the case with Britain in the nineteenth century and is the case with China today. This period also witnessed the resurgence of world FDI. By the end of the 1980s, FDI was less than 1 per cent of world GDP, but it rose to 3.1 per cent in the period 2006–08. In...

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