Geopolitics of business: Where Brazil should go?

InternationalTradeThe economic science has taught that resources are finite. Therefore, prioritization is the name of the game for institutions, managers and even countries. Lourdes Casanova and Julian Kassum, in their great book “The Political Economy of an Emerging Global Power – In Search of the Brazil Dream” address the unfinished debate about the priorities of Brazilian foreign policy. The authors argue that Brazil needs to find its role on the global stage. Which regions or countries should Brazil focus its efforts to increase trade and invest in order to make a difference in the global arena?. As Prof Casanova and Mr. Kassum clearly puts: “Where Brazil should go?” The many geographical options include, but are not limited to, Brazil´s own neighbors – Latin America, Brazil´s traditional commercial partners – the US and EU, Brazil´s newest trade partner – China, other BRIC countries – Russia and India, and the newest trade frontier – Africa. Table 1 presents a brief, unilateral and unfinished comparison between the pros and cons for each option. As usual, this blogger kindly accepts any comments and criticism.

Pros Cons
Latin America Size of Brazilian economy compared to the economies of other countries; long history of intraregion trade; peaceful frontiers Diminishing intraregion trade over time, growing populism in the region; situation of Venezuela and Argentina
US Size of US domestic market; US as a source of technology and innovation Subsidies to local producers of steel and ethanol, among other items
EU Size of EU markets, strong presence in LatAm of EU multinationals from Germany, France, Italy, Spain and Sweden Subsidies to many agricultural products
China Size of Chinese domestic market Possible deceleration of chinese economy, very large CAGE distance
Other BRIC economies: Russia and India Size of market, alternative sources of technology (aerospace, computer science) Non-tariff trade barriers, large CAGE distance, different political agenda
Africa Potential trade frontier with the political and economic stabilization of the continent;  Brazil can be a source of technology and high-value services (expertise in large infrastructure projects, project management); strong cultural ties between Africa and Brazil Lack of knowledge of local markets, obscure regulations

Table 1: Brazil´s geographical options for investment and international trade

The crossroad that Brazil currently faces is not uncommon because many other countries had to make difficult decisions in the past. Japan became an industrialized country during the last century because it reshaped its foreign policy and South Korea is currently a rich country because invested heavily in education. It´s time for the latin giant to make choices. Brazil needs a plan to improve its position in the world and a strategy that answers a critical question: Where Brazil should go?

Brazil in Latam

As usual, I leave a question to the followers of this blog: Do you know any other country that survived a difficult scenario and succeeded after making hard choices?

Source of image of “International Trade” here; source of image of Brazil here

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