Different Partners, Different Patterns in Production and Trade: The Case of Brazil

This paper aims to evaluate to what extent the relationship between the Brazilian trade pattern and the domestic productive structure follows two different types of coevolution. The first type of coevolution is a Ricardian-type one and follows the comparative advantages theory (‘outward approach’). The second is what we call a Linderian model, where the internal production plays an important role in determining what the country exports (‘inward approach’). As Brazilian export composition differs significantly by destination, we seek to identify which pattern of coevolution between production and trade predominates in Brazil. This study has been undertaken in two steps. First, we compare the composition of Brazilian exports by geographical destination using both the traditional trade statistics and the trade in value added. Secondly, we assess the structure of the value of production, the value added and the direct employment associated to each trade partner, in order to evaluate how changes in the structure of export’s destination could affect the productive structure in a broader context. The statistics used in this present analysis – including the trade in value added by partner – are calculated upon available estimations of Brazilian input-output tables between 2000 and 2008. The main conclusion of this paper is the fact that a geographical disaggregated view of the relationship between trade and production allows a better analysis of the coevolution of production and trade in Brazil. While the ‘inward approach’ of coevolution clearly predominates in the relationship between Brazil and its American partners, the ‘Ricardian’ type of coevolution is clearly predominant in the relationship with European and Asian countries.