BRAZILIAN ROLE IN THE GLOBAL VALUE CHAINS

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1 BRAZILIAN ROLE IN THE GLOBAL VALUE CHAINS Joaquim J.M. Guilhoto Denise Imori Department of Economics University of São Paulo - Internet: guilhotojjmg.wordpress.com Université Paris-Dauphine 27 th January 2014

2 AGENDA Introduction The Brazilian Economy Methodology Database Results Final Comments

3 INTRODUCTION

4 BRAZIL IN THE MAP 1

5 BRAZIL IN THE MAP 2

6 BRAZIL IN THE MAP 3

7 BRAZIL IN THE MAP 4

8 THE BRAZILIAN ECONOMY

9 SAVINGS & INVESTMENT

10 WORLD GDP

11 GDP DEVELOPING COUNTRIES

12 GDP - BRICS

13 BRAZIL MONTHLY INFLATION RATE 90 COLLOR I MONTHLY INFLAÇÃO INFLATION MENSAL NO RATE BRASIL IPCA -IBGEIPCA - IBGE REAL VERÃO CRUZADO BRESSER COLLOR II

14 DEBT OF THE PUBLIC SECTOR 65,0% 55,0% 45,0% Dívida Total % of GDP DÍVIDA LÍQUIDA DO SETOR PÚBLICO (% DO PIB) 35,0% 25,0% Dívida Interna Internal 15,0% 5,0% External Dívida Externa -5,0% jun/91 jan/92 ago/9 mar/9 out/93 mai/9 dez/9 jul/95 fev/96 set/96 abr/97 nov/9 jun/98 jan/99 ago/9 mar/0 out/00 mai/0 dez/0 jul/02 fev/03 set/03 abr/04 nov/0 jun/05 jan/06 ago/0 mar/0 out/07 mai/0 dez/0 jul/09-15,0%

15 TAX BURDEN 1 40% % of GDP CARGA TRIBUTÁRIA BRUTA NO BRASIL - % DO PIB 35,8% 35% 30% 25% 20% 15% 10%

16 INTERNATIONAL RESERVES

17 THE MODEL (METHODOLOGY)

18 METHODOLOGY X BY The Leontief Model Trade in Value Added V WX V WBY WB G V GY rr rr r n r n rr r r rr rr r n r n y y y y G G G G v v v v

19 METHODOLOGY Trade in Value Added V GY r rr r r r Y Y G G G G V V Global Value Chain (GCV) Participation Index, Koopman et al. (2011) ' 0 0 ' ˆ 1 Cr C C W W W E r E E 0 0 ˆ 1

20 METHODOLOGY Value added by source embodied in exports r rr Cr r Cr r r C C C E B W E B W E B W E B W BE W ' ' ' ' ˆ ˆ Foreign value added that is embodied in a given country s exports (backward) j i j ij Ci j E B W FV ' Country s intermediate inputs that are embodied in the exports of other countries (forward) j i i ji Cj j E B W IV ' j j j j j E IV E FV Participation GVC _ Global Value Chain (GCV) Participation Index, Koopman et al. (2011)

21 THE DATA

22 THE DATA WIOD's series of world input-output table for the period of IDE s BRICs international input-output table for 2005

23 THE RESULTS

24 BRAZIL IN GVC Exports and imports of value added, as % of total value added in the economy

25 BRAZIL IN GVC Exports and imports of value added, as % of total value added in the economy

26 BRAZIL IN GVC Value added footprints 1,10 1,05 1,00 0,95 0,90 0,85 0,80 Brazil China India Russia Japan EU25 U.S.A.

27 BRAZIL IN GVC GVC participation index, 2005

28 BRAZIL IN GVC GVC participation index, selected countries, ,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 Brazil China India Russia Japan U.S.A.

29 BRAZIL IN GVC GVC participation index, Brazil,

30 BRIC S ECONOMIC INTERDEPENDENCE Countries Brazil China India Japan EU25 Russia U.S.A. 25 Sector classification Code Description Code Description 001 Agricultural products 014 Non-metallic mineral products 002 Livestock and poultry 015 Metals and metal products 003 Forestry 016 Industrial machinery 004 Fishery 017 Computers and electronic equipment 005 Crude petroleum and natural gas 018 Other electrical equipment 006 Other mining 019 Transport equipment 007 Food, beverage and tobacco 020 Other manufacturing products 008 Textile, leather, and the products thereof 021 Electricity, gas, and water supply 009 Wooden furniture and other wooden products 022 Construction 010 Pulp, paper and printing 023 Trade and transport 011 Chemical products 024 Other services 012 Petroleum and petro products 025 Public administration 013 Rubber products

31 BRIC S ECONOMIC INTERDEPENDENCE Value added multiplier effect, Brazilian industries

32 BRIC S ECONOMIC INTERDEPENDENCE Value added spillover effect per economy, Brazilian industries

33 BRIC S ECONOMIC INTERDEPENDENCE Final demand system (2005 US$, million) Brazil China India Russia Japan Brazil China India Russia Japan EU U.S.A EU25 U.S.A. R.o.W. Total Brazil China India Russia Japan EU U.S.A

34 BRIC S ECONOMIC INTERDEPENDENCE Brazilian exports of value added (2005 US$, thousands)

35 BRIC S ECONOMIC INTERDEPENDENCE Sectoral composition of Brazilian exports of value added

36 BRIC S ECONOMIC INTERDEPENDENCE Destination of the industries value added

37 BRIC S ECONOMIC INTERDEPENDENCE Brazilian imports of value added (2005 US$, thousands)

38 BRIC S ECONOMIC INTERDEPENDENCE Sectoral composition of Brazilian imports of value added

39 BRIC S ECONOMIC INTERDEPENDENCE Bilateral trade balances (2005 US$, thousands)

40 FINAL COMMENTS

41 FINAL COMMENTS Brazilian trade in value added is quite limited compared to EU25 and to the other BRIC economies. In the period , however, it exhibited an increasing trend, following the global upsurge of trade in value added. Much of the Brazilian participation in the GVCs is due to its sourcing of intermediate inputs to other economies.

42 FINAL COMMENTS The spillover effects of high / medium-high technology industries of Brazil stand out, being mainly directed to the developed economies. The Brazilian trade in value added with China was largely based on metallurgical activities. Exports of agricultural products to China also embodied large figures of value added.

43 FINAL COMMENTS Chinese exports of value added to Brazil by some high / medium-high technology industries were expressive. In the case of India and Russia, the Brazilian exports of value added were largely generated in the low technology food industry, while the Brazilian imports of value added were notably related to petroleum and petro products.

44 FINAL COMMENTS The non-energy mining and the metallurgical industries value added in Brazil was generated in a large extend (more than 40%) to meet the final demand of foreign economies.

45 FINAL COMMENTS Merci! guilhotojjmg.wordpress.com

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