Giuliana Napolitano
São Paulo – Brazilian export to developing countries has been rising more than that to advanced economies. Brazilian participation in less developed nation import is greater than the world average. This is what a study by the Institute for Studies in aid of Industrial Development (Iedi), published last Friday (27), shows.
According to the study, from 2000 to October 2003 (the last month Iedi studied), Brazilian export has risen on average 11%. Sales to developed countries rose 9%. To the poorer nations, despite the crisis in Argentina, one of the main markets for domestic products, the increase was 13%. There was also a 17% expansion in business with countries the International Monetary Fund (IMF) classifies as "in transition": basically Eastern Europe, Central Europe, and Mongolia. To the developed countries, the increase was 9%.
With this, more advanced economy participation in Brazilian export dropped from 61.5% to 58.2% in the period. At the same time, the share to developing countries and those in transition rose from 36.7% to 40.2%.
According to the executive director of Iedi, Julio Sérgio Gomes de Almeida, this change started around four years ago, when the Mercosur, the Common Market of the South, a customs union between Brazil, Argentina, Uruguay, and Paraguay went into a crisis. "The positive side was that the crisis generated businessman interest in new markets and in diversifying export destinations," he stated, in an interview to ANBA.
This interest became a necessity a little later. The collapse of the Argentine economy made Brazilian export to the Mercosur drop 23% in 1999; they then rose 14% in 2000 and once again dropped 18% and 48% in the two next years. To have an idea of the crisis, says the Iedi study, despite shipments to the commercial bloc having risen 71% last year, the business volume – which totalled US$ 5.7 billion – is still below the 1999 total (US$ 6.8 billion).
With this, production started being shipped to other markets: sales to Africa, for example, rose 44% in 2001 and 27% in 2002. To the Middle East and Turkey, the increase was 38% and 13%, respectively. And, in the case of the developing Asian countries, expansion was 46% and 37% in both years.
"Good market"
"The figures therefore show that developing countries are a good market for Brazil, who had not discovered this," stated Gomes de Almedia. "It is important to know this clearly, especially at a time of Free Trade Area of the Americas (FTAA) talks, discussion of subsidies at the World Trade Organization (WTO) and accords with the European Union. We are identifying flourishing trade elsewhere," he added.
The executive points out that a large part of the business with the Mercosur was also directed to developing countries, especially to those in the European Union and also to the United States. But the search for developing countries was greater. According to him, this was due to two main reasons.
One of them was the establishment of multinationals in Brazil, which became an export base to Latin America. This is what happened with the auto and mobile phone industry. This has happened in many industrial sectors. In the case of agribusiness, due to the increase of Brazilian agricultural production and to rich-nation protectionism rising at almost the same rate, it was necessary to find new markets. "This made businesses go after alternative markets," explained Almeida.
Greater participation
The Iedi study also shows that although Brazilian participation in products traded on the global market is small – around 1% -, the rate is greater in developing countries. In 2003, for example, it reached 2%.
The region that buys most goods from Brazil is Latin America: last year the country contributed to 6.1% of import by these countries. If Mexico – which is a member of the North American Free Trade Agreement (Nafta) – is excluded from these countries, participation rises to 17%. After that, but far away, come Africa (1.7%), the Middle East and Turkey (1.4%) and the Asian developing countries (0.9%). In the rich nations, Brazilian participation was 0.8% in 2003.
Little news
Developing countries have gained importance in the Brazilian export basket, but export is still mainly to countries that are already known to and explored by the country. "We are still waiting to see greater expansion to new markets," stated Almeida.
For example: in the case of the Middle East and Turkey, excluding Iran, which is the greatest buyer of Brazilian products in the region, the export growth has dropped from 22% to 9%. In Latin America, except for Argentina, the expansion has dropped from 26% to 9%. And in Asia, excluding China, the rise has dropped from 49% to just 1%. The average increase to all the developing markets in this scenario drops from 13% to 8%.
The executive believes, however, that the tendency from now on is also to increase business with these non-traditional markets. "We first go after the countries with whom we already have commercial relations. Now it is expected that other regions should be targeted," he explained. "The government is also more attuned to this fact," he added.
Last year, in an attempt to increase trade, the Brazilian government organized trade missions to countries that are lower down on the trade balance, like the Arab countries. President Luiz Inácio Lula da Silva made the first official visit by a Brazilian head of state to the Middle East and North Africa in over one century. Last year the Brazilian Export Promotion Agency (Apex) and the Arab Brazilian Chamber of Commerce (CCAB) organized the Brazilian Week & Trade Exhibition, the largest Brazilian business fair in the region.
The government and CCAB expectation is that Brazilian export to the region should reach US$ 7 billion up to 2006. Last year, sales totalled US$ 2.7 billion.
