• Competition policy

Competition policy

This study examines Brazil’s export discoveries; particularly in aircraft, cell phones and swine meat. Statistical records in the past three decades reveal that exports of all main categories of goods have expanded considerably. The paper notes that a large share of total exports was concentrated in a few agricultural and mineral commodities, but their share in total exports had declined substantially by 2005. Moreover, manufactured commodities became basic exports that account for over half of total exports. These developments characterise a major diversification of Brazilian exports, which reaffirms Brazil’s role as global trader.

The paper considers that changes in competitiveness caused by economic policy and comparative advantage shifts were at the root of the recent export boom. In addition, it points out the reasons behind Brazil’s remarkable export performance:

• benefiting from the high growth in world trade, while increasing somewhat their market shares in some traditional markets
• regionally diversifying exports of traditional goods, in a process that can be called new markets "discovery"
• benefiting from the rise in export prices
• taking advantage from the increased competitiveness of agriculture
• exporting products that were not exported before, where country-specific innovations played a decisive role in non-traditional markets

The study reviews the three selected cases, trying to answer these main questions:

• what were the drivers behind these export discoveries?
• what were the uncertainties and coordination problems?
• how was the diffusion process after the initial entry into the export activity?
• who were the main movers, and how did the followers affect the pioneers?

The paper main findings are:

• both economic policy and comparative advantage played important roles in the emergence of new export activities in Brazil
• economies of scale were a crucial determinant of competitiveness
• governments should support establishing a system of risk-sharing with the producers to improve the knowledge of how to fulfil requirements of potential destination markets
• governments should help the development of export-oriented logistics systems
• the existence of high import tariffs and quotas in destination markets deserves special attention in negotiation forums
• the role of credit under competitive conditions should not be underemphasised in improving the competitiveness of exports
• strategies should concentrate on design, marketing, research and development, and product assembly; in coordination with foreign suppliers
• governments can foster discoveries, especially in the presence of market failures, but policy alone cannot produce a successful exporter

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