Despite holding a leading position in world trade negotiations, Brazil will benefit little from increased trade. Policy makers face acute challenges as the country struggles to generate sufficient employment and improve labor incomes.
The Brazilian economy has experienced sustained growth since 2000, after several turbulent decades. The country’s engagement with the global economy has played a largely positive, if secondary, role and Brazil has assumed a leading position in world trade negotiations. At the same time, the country has struggled to generate sufficient employment and improve labor incomes. Unemployment hovers at about 8 percent, and of those who work, slightly more than half do so informally. Average earnings today are lower than in the mid-1990s.
Brazilian policy makers face complicated challenges as they try to grow the economy in ways that will generate better livelihoods and incomes. The current global economic downturn is likely to make these tasks even more difficult. The purpose of this study is to contribute to the knowledge base upon which the Brazilian government and public, as well as the international community, evaluate the policy choices the country faces in the realm of trade. It employs computable general equilibrium models of the global and Brazilian economies to simulate a range of possible trade agreements, and explores the effects of these changes on the Brazilian economy, including its sectors, workforce, and households.
Overall, this study shows that the impact of increased trade on the Brazilian economy will be very small, even from a new global agreement at the World Trade Organization or from a very ambitious free trade pact with the largest developing countries. In addition, Brazil will expose its economy to stronger effects from other global policy shocks, such as world price volatility, as it opens its markets. After a careful analysis of the benefits and costs of trade liberalization and specific trade policy choices, increased global economic engagement may still be seen as beneficial for the Brazilian economy. However, it is important in policy debates that the nature and costs of structural adjustment be taken into account and that the pattern of trade achieved serves the country’s long-term development goals.
Former Senior Associate, Director, Trade, Equity and Development Program
Until April 2002, Polaski served as the U.S. Secretary of State’s Special Representative for International Labor Affairs, the senior State Department official dealing with such matters.
Joaquim Bento de Souza Ferreir
Janine Berg
Scott McDonald
Karen Thierfelder
Dirk Willenbockel
Former Senior Associate, Trade, Equity and Development Program
Zepeda is inter-regional policy coordinator of the Development Policy and Analysis Division, Department of Economic and Social Affairs at the United Nations General Secretariat. He was previously a senior associate in the Trade, Equity, and Development Program at the Carnegie Endowment for International Peace.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
Integrating AI into the workplace will increase job insecurity, fundamentally reshaping labor markets. To anticipate and manage this transition, the EU must build public trust, provide training infrastructures, and establish social protections.
Amanda Coakley
EU member states clash over how to boost the union’s competitiveness: Some want to favor European industries in public procurement, while others worry this could deter foreign investment. So, can the EU simultaneously attract global capital and reduce dependencies?
Rym Momtaz, ed.
The EU lacks leadership and strategic planning in the South Caucasus, while the United States is leading the charge. To secure its geopolitical interests, Brussels must invest in new connectivity for the region.
Zaur Shiriyev
As European leadership prepares for the sixteenth EU-India Summit, both sides must reckon with trade-offs in order to secure a mutually beneficial Free Trade Agreement.
Dinakar Peri
Beset by an increasingly hostile United States, internal divisions, and the threat of Russian aggression, the EU finds itself in a make-or-break moment. U.S. President Donald Trump calls it a decaying group of nations headed by weak leaders. Is Europe able to prove him wrong?
Thomas de Waal
