Question and Answer: Brazil Agriculture
MBAA 604
Activity 1.4 – Case Study 1: Emerging Markets: Brazil’s Quest for Comparative Advantage
1. Why is Brazil’s agriculture so competitive? Why do its manufacturing industries lack competitiveness?
ANSWER: Although Brazil’s products within the agricultural market are not rare or hard to imitate, its industry is able to produce more using a fraction of the resources compared to other countries, all while still maintaining a high standard of quality. This allows Brazil to become the world’s top producer and exporter of such goods. Brazil is able to export more at a reduced cost making it difficult for other countries to compete. On the other hand, its manufacturing industries lack similar world-wide competitiveness due to their “infant” status among world leaders. The shift to focus on manufacturing is fairly new to Brazil and it would seem there is not much of a foundation to build off of. From the information provided, the rising costs of energy, raw materials and wages are crippling the growth of Brazil’s manufacturing base. There is no reason for a foreign or even domestic investor to manufacture goods within Brazil given that the cost of doing business decreases any possible profit margin despite imposed import tariffs.
2. Why have Brazil’s governments in both the 20th and 21st century been eager to develop world class manufacturing?
ANSWER: Brazil wants to modernize its economy. From the information provided, Brazil believes that the only way to do this is to focus on building a world-class manufacturing base. This however, comes with a certain opportunity cost. Brazil’s leadership seems determined to diversify its economy to steer away from a dependence on agriculture. If successful, Brazil can become more of an independent nation with economic freedom relying on goods manufactured domestically.
3. How can Brazil shift some of its resources from uncompetitive industries to competitive industries?
ANSWER: Brazil can find a balance
Activity 1.4 – Case Study 1: Emerging Markets: Brazil’s Quest for Comparative Advantage
1. Why is Brazil’s agriculture so competitive? Why do its manufacturing industries lack competitiveness?
ANSWER: Although Brazil’s products within the agricultural market are not rare or hard to imitate, its industry is able to produce more using a fraction of the resources compared to other countries, all while still maintaining a high standard of quality. This allows Brazil to become the world’s top producer and exporter of such goods. Brazil is able to export more at a reduced cost making it difficult for other countries to compete. On the other hand, its manufacturing industries lack similar world-wide competitiveness due to their “infant” status among world leaders. The shift to focus on manufacturing is fairly new to Brazil and it would seem there is not much of a foundation to build off of. From the information provided, the rising costs of energy, raw materials and wages are crippling the growth of Brazil’s manufacturing base. There is no reason for a foreign or even domestic investor to manufacture goods within Brazil given that the cost of doing business decreases any possible profit margin despite imposed import tariffs.
2. Why have Brazil’s governments in both the 20th and 21st century been eager to develop world class manufacturing?
ANSWER: Brazil wants to modernize its economy. From the information provided, Brazil believes that the only way to do this is to focus on building a world-class manufacturing base. This however, comes with a certain opportunity cost. Brazil’s leadership seems determined to diversify its economy to steer away from a dependence on agriculture. If successful, Brazil can become more of an independent nation with economic freedom relying on goods manufactured domestically.
3. How can Brazil shift some of its resources from uncompetitive industries to competitive industries?
ANSWER: Brazil can find a balance