Brazil : Embracing Globalization Essay

1319 Words Jan 15th, 2014 6 Pages
Brazil : embracing globalization

This case is about Brazil's development strategy since World War II and about the change of the economic model following the debt crisis of the 1980s. In 2000, Brazilian officials were pondering whether to go for regional integration (Mercosur) or globalization to ensure the country's economic prosperity and development.

Import-substitution strategy

After the Great Depression of the 1930s, Brazil followed an import substitution strategy which consisted of massive government investment, targeting of key industries, and protection against competition with high tariffs walls.

1. Positive effects of this policy : the Brazilian economy experienced rapid growth and considerable diversification.
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Local advantages : Closer trading links between countries strengthen their capacity to participate in world trade. Regional integration enables many countries to overcome the obstacles represented by their relatively small domestic markets, by enabling producers to realize greater economies of scale and benefit from the establishment of regional infrastructures. tariff reduction and harmonization, legal and regulatory reform, payment systems rationalization, financial sector reorganization, investment incentive and tax system harmonization, and labor market reform enables participating countries to pool their resources and avail themselves of regional institutional and human resources, in order to attain a level of technical and administrative competence that would not be possible on an individual basis.
International advantages : allows countries to assert their interests from a stronger and more confident position in the international arena. Developing countries really have to integrate into world markets if they wish to succeed.

3. Alternatives : to find viable alternatives, we have to look at the opportunities and threats

Brazil owns over 270 million hectares of unused land with a potential for agricultural use. This opportunity provides a potential resource for the poorer Brazilians. The creation of

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