According to recent data shown in a World Economic Forum article (written by Otaviano Canuto), it can be easily concluded that Brazil is an unusually closed economy. Perhaps most people knew that already, but here are some facts.
The share of exports and imports in GDP was only 27.6% in 2013 while other BRICS reached trade-to-GDP ratios of at least 50%. Looking at 2013 data from 176 countries available through the World Bank’s World Development Indicators (WDI) database, the average trade-to-GDP ratio is 96%. Even among the six countries with a larger economy than Brazil, the average is 55%.
Here’s more, according to the article:
“… very few Brazilian firms export. The share of exporters among all formal-sector firms is less than 0.5%. Indeed, the absolute number of exporters in Brazil – less than 20,000 – is roughly the same as that of Norway, a country of just over five million people compared to Brazil’s 200 million. This means that, while in Norway there is one exporting firm for about every 250 Norwegians, the ratio in Brazil is one for every 10,000 Brazilians.”
Lack of engagement of Brazilian firms with the outside world
According to the article, Brazil’s absence from global production networks and resulting density of domestic value can only in part be explained by the relative distance (geographical as well as institutional) from major economic centres – like other LAC countries. However it is also in large part a result of policy decisions past and present on trade and local content.
The author of the article suggests that this problem could be solved by “opening up and integrating more deeply in global value chains [which] would result in the closure of less competitive production chain segments and their substitution with imports, eliminating the deadweight loss associated with inefficient domestic production“.
Great article overall, we recommend the full read below.
Source: Business Insider