Final project of the course "Trading for Development in the Age of Global Value Chains" - WDR 2020

1. Brazil in Global Value
Chains

2. Brazil's
participation
occurs in stages
with lower added
value especially in
the supply of
inputs such as
Iron oreSugarcane
Soybean Cellulose

3. Given its large domestic
market, one of the largest
in the world, the country
also participates in the
chains as a consumer of
goods and services
209.5
million people
(2018)

4. Implications of low value
added insertion
Fluctuations in costs
and prices of raw
materials
Vulnerability in the
face of crises or
other changes/
trends

5. So how can Brazil
penetrate these global
value chains in positions
that go beyond a
supplier of raw
materials or a consumer
market for more
developed products?

6. There is no need to fill
out a type of form. In
fact, it is necessary to
provide the necessary
conditions and a good
environment for
companies to decide
whether to invest in the
country.

7. Market size Geography
Larger countries have a larger industrial
capacity, tending to attract a larger set of
GVCs stages. They are also likely to be
geographically close to the consumers of
final goods and can offer more domestic
suppliers.
Longer geographical distances to the major
GVC hubs such as China, Germany, and the
United States may jeopardize a country's
attractiveness. In addition, high transport costs
can also impede entering, establishing, and
upgrading in GVCs.
What does a company
actually analyse
Factor endowments Institutional Quality
However, these elements does not need to "dictate destiny"...
Abundance of natural resources, skilled
workers, low labor costs, capital.
Legal certainty, compliance, strong institutions,
less bureaucracy.

8. Tax rates
Poorly
educated
workers
How does companies see
Brazil?
Obstacles for firms in the country
33,5%
12,6%
Informal
sector
12,4%
68,8%
Identify
corruption as
a major barrier
45,4%
Identify the legal
system as a major
barrierIdentify customs and
trade regulations as a
major constraint
29,2%
More numbers
*Source: https://www.enterprisesurveys.org/en/data/exploreeconomies/2009/brazil#infrastructure

9. "The constraints of a small market and limited local inputs can be overcome by
liberalizing trade at home and negotiating liberalization abroad in order to liberate
firms and farms from dependence on local inputs and narrow domestic demand"
(World Bank Report,2020). In the case of Brazil, as seen above, the most highlighted
hurdles are related to domestic policies and institutional quality and not to market
size, for instance.
Nevertheless, signing preferential agreements may also positively impact these
challenges faced by Brazil. This is because, in addition to boosting market access,
trade agreements allow the reduction of other regulatory barriers, fostering
greater international cooperation, and improve institutional, infrastructure, and
governance issues. Furthermore, although the size of the Brazilian market is not an
obstacle, the agreements can low tariff and non-tariff barriers, cheapening the
production process and increasing competitiveness.
As examples of countries which have implemented this productive logic and
promoted liberalizing initiatives in their economies, China and Vietnam can be
underlined.
... the right policies may further collaborate in atracting GVCs

10. China has not always been considered a
hub. This process was enhanced with its
accession to the World Trade
Organization (WTO). The Asian country
has been expanding its trade networks
and has come to be considered as a
necessary economic power for world
production. In addition to functioning as
a primary producer of goods with high
added value, the country also figures as
a major buyer of commodities and
industrial products and as an important
consumer market.
China

11. According to the World Bank Report
2020, "Vietnam’s electronics sector
expanded dramatically in less than a
decade. Today, Vietnam is the second-
largest smartphone exporter, producing
40 percent of Samsung’s global mobile
phone products and employing 35
percent of its global staff". Trade
liberalization iniatives, a favorable
investment climate, and a large pool of
low-cost labor have determined
Vietnam’s attractiveness for production
and contributed to its economic
development.
Vietnam

12. Scale of production
Enhance internal policies
Job offer
Encourage the production of more
environmental friendly goods
Information
Why join global value chains?
Specialization
Availability of inputs
Market access
More inclusion
Improve infrastructure
CompetitivenessDevelopment

13. In addition to improving these factors identified as obstacles
for companies (page 9), Brazil can utilize its advantages
(natural resources) to develop industries that use these
factors more intensively, such as metallurgy,
petrochemicals, food, apparel, footwear, wood, paper and
cellulose, and leather.
Furthermore, as global chains tend to be more regional, the
country could focus on its integration with MERCOSUR - a
bloc joined by Brazil, Argentina, Uruguay and Paraguay.
It could also move forward with its international trade
agenda and domestic reforms, such as the Tax Reform, in
order to atract foreign investment and thus more value-added
stages.
Some options to the Brazilian
government

14. References
WORLD BANK. World Bank Report: Trading for Development in the Age of Global Value
Chains, 2020
OLIVEIRA, C. A INSERÇÃO DO BRASIL NAS CADEIAS GLOBAIS DE VALOR: Uma análise
sobre a relevância das políticas industriais para a inserção internacional. Repositório
Universidade Federal de Santa Catarina, 2018.
REIS, C. O QUE SIGNIFICA MELHORAR A INSERÇÃO DO BRASIL NAS CADEIAS GLOBAIS
DE VALOR?. IPEA, Radar, 56, abr. 2018.
VÁRIOS AUTORES. A Inserção do Brasil nas Cadeias Globais de Valor. Centro Brasileiro de
Relações Internacionais (CEBRI), Dossiê, Edição Especial, Volume 2, Ano 13, 2014.