Brazil: Embracing Globalization? Essay

1527 Words Nov 15th, 2006 7 Pages
BRAZIL: EMBRACING GLOBALIZATION?
Background
This case focuses on Brazil's development strategy since World War II and on the change of the economic model following the debt crisis of the 1980s. At the time of the case Brazilian officials are deciding whether regional integration or globalization offer the best route to economic prosperity and development. This case illustrates the challenges that developing countries face in defining trade policy. It also introduces the role of regional trade blocks as an alternative to globalization. At the current time regionalism seems to be very much in vogue and seems to be much more likely to be the basis for future trade system changes than comprehensive trade treaties.
Brazil's Import
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Argentina became Brazil's second trading partner after the US. Bilateral trade between Brazil and Argentina represented approximately 75% of the total trade flows in the region. Intra-regional trade had created opportunities for economies of scale mostly in the manufacturing sectors without a major displacement of local production in the Brazilian economy. The inter-sectorial specialization pattern favored Brazil. Mercosur allowed Brazil some flexibility to protect and expand considered important to the country. Thus Mercosur had brought short term but substantial economic and political benefits to Brazil.
Regional Integration and Globalization
Regional integration is a process by which countries remove the barriers to free trade and the free movement of people across national borders, with the goal of reducing the tensions that can lead to international conflict. It is an intermediate step toward the integration of developing countries into the world economy. The progress due to the regional integration is attributable primarily to domestic adjustment efforts, rather than to exogenous factors. These efforts feature the implementation of appropriate structural and macroeconomic policies designed to improve economic efficiency and create the conditions for greater integration into the world economy. Regional integration offers many advantages for developing countries. Closer trading links between these countries would strengthen their capacity to

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