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Published in:
Introduction: International Integration of the Brazilian Economy from Local Perspectives Read chapter Read first chapter

2019 | OriginalPaper | Chapter

2. Domestic Demand and Foreign Trade: The Brazilian Growth Trajectory

Authors : Roberto Alexandre Zanchetta Borghi, Fernando Sarti

Published in: International Integration of the Brazilian Economy

Publisher: Palgrave Macmillan US

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Abstract

This chapter analyzes Brazil’s economic growth in the 1990s and 2000s, pointing to interactions between demand and supply. The Brazilian growth pattern over this period has been mainly based on consumption and low investment levels. Important changes have been observed, however, toward a reduction of external vulnerability and a growing reliance on domestic market as a source of demand. Domestic industry, in turn, has not followed this movement and a growing mismatch between domestic demand and supply challenges a sustained growth recovery, particularly in the face of the international crisis.

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previous chapter Introduction: International Integration of the Brazilian Economy from Local Perspectives
next chapter The Competitiveness of Brazilian Manufacturing in Both Domestic and International Markets
Appendix
Available only for authorised users
Footnotes
1
See O’Neill (2011), IMF (2011) and World Bank (2011).
 
2
For a critical analysis, see Palma (2013).
 
3
Expression coined by Williamson (1990) to express the economic approach on which recommendation policies of multilateral institutions, such as the World Bank and the International Monetary Fund (IMF), for developing economies in the 1980s and 1990s were based.
 
4
Data from the World Bank, the Brazilian Central Bank, and the World Input-Output Database (WIOD) are used in this chapter. For more details on the input-output methodology, see Appendix.
 
5
Most remarkable financial crises during the 1990s were Mexican, Asian, Russian, and Brazilian crises in 1994, 1997, 1998, and 1999, respectively.
 
6
See Keynes (1936, 1937) for a theoretical discussion on the importance of investment for the determination of the level of economic activity.
 
7
Privatization was regarded as a way to improve efficiency of services offered by state enterprises and obtain funds to control public budget. Many previously state-owned companies, such as CSN, Embraer, and Vale, created in 1941, 1969, and 1942, were privatized in the 1990s, more specifically in 1993, 1994, and 1997, respectively. This process of privatization also involved many telecommunications, electricity, and banking companies, particularly in the second half of the 1990s (Fleury and Fleury 2009).
 
8
See Chang (2002) and Cimoli et al. (2009) on the importance of fostering domestic industry for economic growth.
 
9
For a vast discussion of economic policies adopted in Brazil in face of the international crisis and years thereafter, see Modenesi et al. (2012) and AKB (2013).
 
10
This chapter does not deal with the domestic recession that the Brazilian economy has been facing since 2014 but with structural demand-supply imbalances underlying its trajectory before.
 
11
In the face of the international crisis, some transnational corporations have promoted massive profit and dividend remittances from subsidiaries in profitable and in expansion emerging markets, such as Brazil, to their headquarters in developed economies in order to offset big losses they were incurring since the crisis.
 
12
See Borghi (2015) for a detailed discussion.
 
13
Data were collected in 2012 when tables at both current prices and previous year’s prices were available at: http://​www.​wiod.​org. For more information about WIOD tables, see Timmer (2012).
 
14
For more details, see Miller and Blair (2009).
 
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Metadata
Title
Domestic Demand and Foreign Trade: The Brazilian Growth Trajectory
Authors
Roberto Alexandre Zanchetta Borghi
Fernando Sarti
Copyright Year
2019
Book
International Integration of the Brazilian Economy

Print ISBN: 978-1-137-46295-4

Electronic ISBN: 978-1-137-46260-2

Copyright Year: 2019

DOI
https://doi.org/10.1057/978-1-137-46260-2_2