Brazils Agricultural Sector - Case Study Example

Brazil’s manufacturing industry lacks competitiveness because there is no comparative advantage in the industrial sector. The cost of energy, raw materials, and wages are high and the consequence is the escalation of the manufacturing costs. Brazil has failed in the quest to keep the industrial operating costs below those incurred in other countries. Therefore, the countries with lower operating costs are more competitive in manufacturing compared to Brazil.

Question Two

Brazil’s governments in the 20th and 21st centuries have been eagerly developing a world-class manufacturing strategy.  The government’s course of action is aimed at switching from an agricultural-based economy to one that is industrial-based. The government wanted to protect the local industries from international competition by imposing taxes on imports through the practice of protectionism.

Question Three

For Brazil to move its resources from the uncompetitive industrial sector to competitive industries, comparative advantage should be given prior consideration. The country should stick to developing agriculture and diversifying the use of agricultural products. For instance, sugar cane can be used to produce more ethanol whose demand is high. Sugar cane is primarily used to produce sugar but diversification will provide a platform for the production of ethanol. The global ethanol trade is lucrative and Brazil would have an upper hand in the international market as a result of its comparative advantage in agriculture. For effective competitive advantage, the agricultural resources should be developed and harnessed into different industries to diversify products coupled with the expansion of the global market (Chaddad, 2014).

Question 4

President Rousseff’s policies limit Brazil’s dependence on foreign goods but they disregard the aspect of comparative advantage. The policies are resulting in more harm than good. For the desired economic developments to prevail, the government should promote investment into the products that are abundant in Brazil. Emphasis on comparative advantage would enable the country to concentrate on the products that it can effectively produce. In the case of Brazil, the comparative advantage lies in the agricultural sector.

The government’s support for protectionism is quite disadvantageous. International trade relations are vital for economic advancement. Given the fact that concentration on comparative advantage requires the country to concentrate on one area of production, there is a need for trading partners who would provide the other goods not produced by the Brazilian industries. Imposing heavy tariffs on imports discourages trading partners from maintaining commercial activities with Brazil. Interdependence is an imperative factor in trade because no country has all the resources it requires for both consumption and economic growth. The president should abolish some of the policies for the industrial operating costs to be reduced. Reduction of the costs would make Brazil competitively viable for the international market (Christensen, 2013).