The commoditization of the economy is in full motion in Brazil

The “commoditization” of exports is progressing in Brazil. Agribusiness and extractive industry items dominated the foreign sales agenda in all regions of the country at the end of 2021.

Soybeans have taken the lead in shipments in ten states, while crude oil or its derivatives have taken the lead in three states, and, finally, iron ore has taken the lead in other three.

The manufacturing industry’s share in Brazilian exports has decreased from 63% in 2010 to 51.3% in 2021, according to data from the Foreign Trade Secretariat (Secex). This category also includes agribusiness products that undergo some type of industrial processing, such as meat, cellulose, and refined sugar.

Even São Paulo, the country’s most industrialized state, has commodities at the top of its export basket. Sugar (US$5.6 billion last year) and crude oil (US$4.3 billion) are the state’s two main exported items. The latter has been having its output increased in recent years due to the pre-salt layer. The first fully industrial item exported, Embraer aircraft, came in third with a contribution of U$2.3 billion.

Passenger vehicles, which rank first among manufactured commodities outside of agriculture and extractivism in Paraná, are only the eighth most exported product. Shoes in Rio Grande do Sul are also ranked eighth. In 2021, soybeans were the most relevant commodity in both states.

The “commoditization” of the Brazilian map, according to economist Paulo Gala, professor at FGV-SP School of Economics, allows for two reflections. First, no state was successful enough to create a sophisticated export agenda to ship high-tech items – rather than having cereals, oil, or minerals as sales champions. Second, the domestic industry is still primarily focused on the domestic market and lacks global competitiveness.

Only micro-regions in the country, according to him, have managed to transform themselves into pockets of innovation and productivity and house top industries, such as Campinas (SP), Piracicaba (SP), Caxias do Sul (RS), and Betim (MG). It’s no surprise, he says, that these are among the cities with the highest per capita income.

“Only a few hubs have sophisticated export-oriented industries that push the local economy, but these hubs are not enough to dominate the economy of an entire state,” says Gala. “What brings jobs, income and decreases inequality is the production of complex goods. They demand research and development, technology, patents. Embraer, WEG, and Marcopolo are counterexamples of our current incapacity for commercial insertion in the world.”

Source: Valor Econômico

To read the full original article please visit:

https://valor.globo.com/brasil/noticia/2022/01/07/commodities-ja-dominam-exportacoes-ate-em-sp.ghtml

Sharing is caring!