The Competitiveness of Brazilian Manufacturing in Both Domestic and International Markets

Abstract

This chapter aims to analyze the competitiveness of Brazilian manufacturing both in the international and the domestic markets. In fact, the performance of Brazilian manufacturing in the period 2000–2013 has been comprehensively analyzed, especially in what concerns the composition of exports and their capacity to promote job creation and income increase. But a thorough analysis of trade and production data reveals that the competitiveness of Brazilian manufacturing in the domestic market is significantly different from that in the international market. In the international arena, it is worth mentioning the tendency toward primary goods exports and the weak insertion of Brazilian manufacturing into global value chains. Concerning the domestic market, primary goods are of less importance in total production, and their composition is considerably different from exports. The methodology for analyzing the competitiveness in the international market included estimates of structural indicators and indicators related to the country’s insertion into global value chains, based on data extracted from the World Input-Output Database (WIOD). The declining trend of manufacturing goods in global trade and the evolution of relative international prices are considered in our analysis. The methodology for analyzing the competitiveness in the domestic market includes the estimation of import penetration ratio and the share of import content in the intermediate and final production, based on data extracted from the Brazilian Input-Output Table. The study concludes that the participation of Brazil in global value chains is comparable, for manufacturing exports, to those of China and Mexico. Concerning the domestic market, imports penetration rose significantly in recent years and the country’s dependence on imported goods increased.