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Case Study: Brazil's Industries, Agriculture and Manufacturing

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1. Why is Brazil's agriculture so competitive?
2. Why have Brazil's governments in both the 20th and 21st centuries been eager to develop world-class manufacturing?
3. How can Brazil shift some of its resources from uncompetitive industries to competitive industries?
4. ON ETHICS: While President Rousseff's critics accuse her of ignoring Brazil's lack of comparative advantage in manufacturing, her supporters argue that her policies force Brazil to reduce its dependence on foreign-made manufacturing goods. If you were to participate in this debate, which side would you be on?

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The Solution addresses the case study questions about Brazil's industries, including their advantage in agriculture and difficulties in manufacturing.

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Why is Brazil's agriculture so competitive? Why have Brazil's governments in both the 20th and 21st centuries been eager to develop world-class manufacturing?

Brazil's agriculture sector is highly competitive because of several factors including an increase global demand for food and animal feed in the 21st century, the ability of the country to concentrate its major exports into a small number of strong global commodities that include coffee, sugar, soybeans, and meal and oil emanating from these soybeans, and its robust poultry and beef exports. When combined together, these factors constitute over 70% of the commodities exported by Brazil. Other variables that reflect favorably for Brazil's robust export market include its low production costs in regard to on-farm production, which has helped mitigate variables that would have otherwise hampered the country's exponential growth in exports. These variables include underdeveloped infrastructure, high interest rates, a high rate of appreciation in its currency, and bureaucratic labor laws and tax codes that are very complex and burdensome for global businesses. In addition, the country's destruction of its rainforests to pave the way for massive plots of pasture-land as well as the ...

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