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THOMAZ ZANOTTOHead Director
DEREXDepartment of Trade and Foreign Affairs
Brazil and the global value chains
The Industry System
Accounts for 131 sector business associations which stands for about 150,000 regional and national firms
• 3rd largest economy in Latin America, after
Brazil and Mexico;
• 70% of Brazilian manufacturing GDP;
• 33% of Brazilian total GDP;
• 48% of domestic production of vehicles;
• 3rd largest aircraft producer in the world;
Source: Investe SP, IBGE, MDIC
The state of São Paulo
DEREX | Department of Trade and Foreign Affairs
Bilateral trade and investment relations...
Source: Aliceweb; Central Bank of Brazil
• 5th largest single direct investor in
2013 (US$ 2.5 bn);
• 6th largest single holder of assets
in the country (US$ 31.3 bn in2012)
• 5th main destination of Brazilian
exports in 2013 (US$ 7.9 bn);
• 7th main source of Brazilian
imports in 2013 (US$ 7.1 bn);
DEREX | Department of Trade and Foreign Affairs
Recently announced japanese investments in Brazil...
• US$ 500 mn in a
new automotive plantat Itirapina, state ofSão Paulo;
• US$ 50 mn in an
eolic energy park atthe state of RioGrande do Sul;
• US$ 500 mn in a
new motor plant atthe state of Goiás;
• US$ 10 mn in a
new plant for medicalinstruments at thestate of São Paulo;
Source: Valor Econômico, 15/08/2014
+ investments in insurance and banking services
DEREX | Department of Trade and Foreign Affairs
Current Brazilian economic portrait
• 1970’s: industry development driven
by imports-substitution;
• Resulted in a diversified industrial
base, from steel to textiles;
• Difficulties in integrating logistics
within the country and the region;
• Custo Brasil: outdated tax system,
bureaucracy compliance, cost of
capital, labour legislation, etc;
Brazilian insertion in the global
value chains is a work in progress...
DEREX | Department of Trade and Foreign Affairs
Relevant cases of Brazilian productive chains...
• Value added: each US$ 1.00Embraer exports, around US$0.70 were imported;
• Main upstream activities(project and development)done in Brazil;
• Globalized supply chain withhigh skilled services content;
• Government procurement in theE&P value chain;
• Opportunities for foreigninvestment in services ofengineering and management ofproduction (derivatives);
• Distribution synergy (e.g: gasoducts crossing industrial clusters);
Oil and Gas:
DEREX | Department of Trade and Foreign AffairsDEREX | Department of Trade and Foreign Affairs
Regional opportunities for insertion in the value chains...
Brazilian automotivesector:
Trade with Argentina and Mexico goes either way in the
automotive value chain, accounting for:
• 15% of Brazilian imports of autoparts (US$ 1.9 bi);
• 72% of Brazilian exports of autovehicles (US$ 4.9 bi);
• 6 international agreementsrelated to the sector enhanced the productivechains with partners in theregion;
Source: ANFAVEA and Sindipecas
DEREX | Department of Trade and Foreign Affairs
Proposals of integration
Deeper physical integration among the countries of
MERCOSUR and ALADI;
Technological cooperation with high developed
economies, like European Union, United States and
Japan;
Trade and investment agreements with strategic
partners to boost upgrading along the value chains;
Enforcement of trade facilitation initiatives among
Latin and African countries;Position paper of FIESP, launchedthis June;
Thank you!
Thomaz ZanottoHead Director
55 (11) 3549 [email protected]
DEREX | Department of Trade and Foreign Affairs