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Brazil is the world's twenty-first biggest exporter. In 2016, the economy's exports totaled $182 billion, while imports totaled $135 billion. Based on these estimates, the nation had a $46.6 billion positive trade surplus. Furthermore, Hubbard et al. (2017) state that the economy's GDP was $ 1.8 trillion, with a per capita income of $1, 5100. Brazil is South America's largest nation. The fact that Brazil has consistently shown promising results in its trading projects demonstrates how positive its economic advancements have been over the years. According to da Silva et al. (2016), the country is greatly dependent on its domestic markets to ensure that it frontiers growth led exportation strategies as opposed to export led growth initiatives. Such measures indicate the proactive role paled by this country in its international relations ventures. The current study seeks to undertake a critical analysis of trade in the Brazilian economy based on the politics of international economic relations.
The steps taken by the Brazilian government to foster positive engagements with the global economy has played a useful role in ensuring that the country increases its external balance over the years. Brazil has grown to become one of the leading players in the global economic policy discussions. Being a member of the Group of Twenty (G-20); an amalgamation of developing economies which come together to spearhead their interests and negotiations in the World Trade Organization, Brazil is well placed to ensure that its trade relations undergo positive growths in its areas of engagement. On the other hand, de Oliviera et al. (2017) explain that Brazil plays a useful role in fostering regional integration in the Mercosor Southern Cone Common Market based on its economic abilities. The economy has shown massive interests in the formation of trade partnerships with other key developing economies like South Africa and India in the platform referred to as India–Brazil–South Africa Dialogue Forum (IBSA) which plays a significant role in ensuring that traders from Brazil get access to the wider African market and the rapidly growing Asian market. Da Silva et al. (2016) explain that in the Western Hemisphere, Brazil has a strong economic presence attributed to its move to block the Free Trade of the Americas initiatives based on the unbalanced and detrimental effects it had for the South America region.
The leaps undertaken by Brazil in economic growth have gone a long way in fostering positive lifestyles among its populace through increasing employment opportunities, reducing the rates of poverty and proper distribution of income despite the challenges it faces. Over the years, Brazil has strived towards reducing its rates of unemployment and increasing labor earnings by maintaining positive international trade relations. According to Hubbard et al. (2017), such positive patterns can be attributed to the country’s advanced economic conditions, which have improved the extents of access to international capital markets. Further, Schierhorn et al. (2016) explain that the fact that Brazil has constantly shifted its investment priorities over the years has played a significant role in changing its relations with crucial multinational bodies like the IMF which have been useful in the provision of foreign exchange liquidity. On the other hand, de Oliviera et al. (2017) explain that Brazil’s positive growth has increased its ability to access long term capital from financiers like the World Bank to spearhead its development agenda.
The study is geared towards seeking answers to the following research question:
What are the effects of Brazil’s trade patterns on its international relations policies?
The trade achievements in Brazil have increased the competitive edge of its international relations.
Brazil’s economic position has been strengthened by the trade relations it has constantly fostered over the years.
Trade Theory: Mercantilism
Mercantilism is considered as one of the ancient systems of trade which found dominance in the 16th and 18th centuries. Mercantilism is considered as the foundation of economic revolution in which people yearned to transform their involvements from local landscapes to exploit national economies, with the feudalists yearning to exploit the complex capitalists’ ideologies. In a nut shell, the aim of Mercantilism played a significant role in transforming different economies in their moves to instill growth while shifting from the known rudimentary patterns to adopt highly complex international trade patterns.
Being a system of trade adored by key trading economies of the 16th, 17th and 18th century, mercantilism proceeded with the premise that the economic wealth and powers of any nation could be best enhanced through adoption of techniques that fostered increments in exports with the collection of precious metals in return. According to Choi and Taylor (2017), the ideologies of mercantilism went a long way in exceeding the gains of the medieval feudal parties located in the Western Europe region like the United Kingdom, the Netherlands, Spain, Belgium and Portugal. The monarch was considered as the source of economic control in all aspects based on the strict policies it upheld in increasing the levels of export while limiting imports as a way of maintaining a positive trade balance.
Exploitation of international boundaries was highly encouraged in the mercantile model based on the opportunities it presented among inter-country traders to initiate international relations through efficient use of resources to invest. Further, the mercantile model encouraged the flow of precious metals like silver and gold which were eventually used to spearhead the growth of economies which were based on prices and monetary inputs. The state was given the liberty to exercise higher levels of control over the economic lives of its inhabitants using established trading companies and corporations in their areas of engagement. The mercantile model of international trade put a lot of emphasis on the need for institutionalization of measures geared towards careful regulation of production processes in such a way that the goods secured from these processes were not only of high quality but also of low cost.this went a long way in enhancing the foreign trade positions of countries in the international landscape.
The mercantile theory stresses that the world’s wealth is fixed. Therefore, a country has to take wealth from the other as a way of increasing its value. Such techniques were well applied through adoption of mechanisms that fostered higher ratio of imports versus exports in a country. This explains why countries across the globe strive to increase their levels of exports while decreasing their imports as a way of increasing their foreign financial reserves and national wealth.
The fact that Brazil strives to maintain a positive trade balance reveals how effective it has been in upholding the ideologies of the mercantile model. The top export destinations of Brazil include China, the United States of America, Argentina, The Netherlands, and Germany. Each of these economies contributed to Brazil’s $182 billion exports in 2016. On the other hand, the Brazil imports refined petroleum products, vehicle parts, packaged mendicants, telephones and crude petroleum. With its imports amounting to $135 billion in 2016, it is clear that Brazil maintained a positive trade balance worth $46 billion. While brazil is ranked as the 26th largest importer on the global scale, it is important to put into consideration the fact that this nation has increased its efficiency of reducing its imports at a yearly rate of -20%.
Capitalism is considered by Zhang and Peck (2016) as an economic system that adores the ideologies of production and consumption of goods and services based on the laws of demand and supply. In this case, individual business operators are given the freedom of owning capital goods. Market economies are applied in this model. The rise of laissez-faire capitalism and free markets is considered as the refined form of applying the ideologies of capitalism in which private business people operate without the fears of restrictions. The restrictions in this context include where to make the desired investments, the kind of goods and services to be produced and sold, as well as the monetary value attributed to these goods and services. In a nut shell, the capitalism model of trade is based on operation of businesses without the restrictions of check and control.
Capitalism goes a long way in resolving the challenges of distributing the resources owned by a nation as well as the issues of economic production. As opposed to the ideologies of socialism and feudalism in which economic planning and decision making processes operate from a centralized political perspective, capitalism adores the roles played by voluntary decision making processes and the decentralization of powers. For instance, ownership of private properties and the legal rights associated with such wealth play a central role in capitalism. According to Martin (2016), the capitalist’s concepts of property ownership originated from John Locke’s homesteading theory in which people were allowed to claim the ownership of private property through adoption of strategies aimed at maximization of labor to acquire the unclaimed resources. Once ownership was claimed, the only legal ways of transferring such property was through inheritance, selling or offering them as gifts. The ideologies of private ownership of resources like land played a useful role in promoting economic efficiency based on the freedoms they availed to owners. Capitalism allows private owners to access incentives using these properties as a way of maximizing their values. Therefore, the resources considered to be more valuable possessed greater trading powers and consequently led to the provision of higher trading powers to property owners. The capitalist system went a long way in allowing the people in ownership of property to access the value associated with the resources under their possession.
Capitalism played a significant role in the elimination of the possibilities of market failure and tragedy of commons by allowing private ownership of property. In this case, a laborer is not allowed to enjoy the fruits of labor performed on a public asset. On the contrary, the gains of this kind of labor are distributed to the entire populace. In such a scenario, there exists a clear disconnection between labor and its value leading to massive gaps in the efforts of increasing production and the value of assets. Such a model incentivizes people to benefit from the hard work done by other members of the society then swoop to enjoy the benefits without personal inputs and expenses. On the other hand, capitalism advocates for the formation of legal systems and regulatory agencies aimed at protecting the legal rights of private owners. Therefore, capitalist economies heavily rely on regulations like tort law, contracts and fair deals to ensure that the right to ownership of private property is attained.
The gains of capitalism are based on the concept of private property ownership. In this case, people are only allowed to enter into voluntary selling of legally owned assets in instances where they believe that the entire process of selling their property will be beneficial. In such scenario, all the parties involved in trading tend to benefit through making profits or gaining extra subjective values of their assets.
The Brazilian economy and trade relations with other economies are entirely capitalistic in their upbringing. Being one of the world’s leading soybeans exporter, Brazil employs capitalists’ ideologies to ensure that it gains higher profits from its ventures. On the other hand, the economy enjoys a greater comparative advantage from its diversified range of 198 export products.
There is no doubt that Brazil has fostered positive international relations both in the South America region and other global regions through its trade initiatives. The fact that the Brazilian economy is able to maintain a positive trade balance explains its resilience in fostering international trade. Application of capitalism and mercantilism models of international trade has played a useful role in demystifying the success enjoyed by the Brazilian economy
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