the globalization process and the productive structure of the brazilian economy in the 1990s

1

The Globalization Process and the Productive Structure of the Brazilian Economy in the 1990s

Joaquim J.M. Guilhotoguilhoto@usp.brESALQ - University of São Paulo and REAL - University of Illinois

Cleise M.A.T. HilgembergState University of Ponta Grossa (Paraná, Brazil) Emerson M. HilgembergState University of Ponta Grossa (Paraná, Brazil)

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AgendaIntroductionTheoretical Background

MultipliersThe Hirschman/Rasmussen LinkagesThe Pure Linkages Approach

The Brazilian Economy in the 1990sResults

The Productive StructureThe External Sector

Final Comments

3

Theoretical Background

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Theoretical Background

Multipliers

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Theoretical Background

The Hirschman/Rasmussen Linkages

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6

Theoretical Background

The Pure Linkages Approach

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Theoretical Background

The Pure Linkages Approach

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The Brazilian Economy in the 1990s

Beginning of the 1990sGlobalizationHyperinflationStart of the openness process

1994The REAL planPrice stabilization

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The Brazilian Economy in the 1990sTable 1. Main Macroeconomic Indicators of the Brazilian Economy, 1990 to 1999.

GDP Growth (%)

GDP Deflator

(%)

Inflation (IGP-DI)

(%)

Investment as a GDP Share

(%)

Average Unemployment

(%)

1990 -4.35 2736.97 1216.97 20.66 4.65 1991 1.03 416.68 496.71 18.11 5.24 1992 -0.54 969.01 1167.17 18.42 6.14 1993 4.92 1996.15 2851.33 19.28 5.75 1994 5.85 2240.17 908.01 20.75 5.44 1995 4.22 77.55 15.02 20.54 4.96 1996 2.66 17.41 9.22 19.26 5.81 1997 3.27 8.25 7.11 19.86 6.14 1998 0.13 4.85 1.84 19.69 8.35 1999 0.81 4.59 19.91 19.10 8.26

Source: IPEADATA (2002)

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The Brazilian Economy in the 1990sGDP & Unemployment in the 1990s

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

%

GDP

Unemployment

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The Brazilian Economy in the 1990sTable 2. Main External Market Indicators of the Brazilian Economy, 1990 to 1999.

Exchange Rate

(R$/US$)

Import Tariff (Average)

(%)

External Debt (US$ Billion)

Exports (US$ Billion)

Imports (US$ Billion)

Trade Balance (US$ Billion)

1990 - 32.2 123.439 31.414 20.661 10.752 1991 - 25.3 123.910 31.620 21.041 10.580 1992 - 20.8 135.949 35.793 20.554 15.239 1993 - 16.5 145.726 38.555 25.256 13.299 1994 0.85 13.5 148.295 43.545 33.079 10.467 1995 0.97 13.0 159.256 46.506 49.972 -3.466 1996 1.04 13.6 179.935 47.747 53.346 -5.599 1997 1.12 13.8 199.998 52.994 59.747 -6.753 1998 1.21 16.7 241.644 51.140 57.714 -6.575 1999 1.79 _- 241.469 48.011 49.210 -1.199 Source: IPEADATA (2002)

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The Brazilian Economy in the 1990sExternal Market

-20

-10

0

10

20

30

40

50

60

70

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

US

$ B

illi

on

Exports

Imports

Trade Balance

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Results – The Productive StructureShare in Total Production, 1990 a 1999

0

5

10

15

20

25

30

35

40

45

50

55

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

%

Public Utilities

Construction

Agriculture

Industry

Services

14

Results – The Productive StructureShare in the Value Added, 1990 a 1999

0

5

10

15

20

25

30

35

40

45

50

55

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

%

Services

Industry

Construction

Agriculture

Public Utilities

15

Results – The Productive StructureShare in Employment, 1990 a 1999

0

5

10

15

20

25

30

35

40

45

50

55

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

%

Services

Industry

Construction

Agriculture

Public Utilities

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Results – The Productive Structure

Source: Research Data.

Figure 1. Electroeconogram of the Changes in the 1990 Output Multiplier, Type I, 1991 to

1999

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1991 1992 1993 1994 1995 1996 1997 1998 1999

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Results – The Productive Structure

Source: Research Data.

Figure 2. Electroeconogram of the Changes in the 1990 Output M ultiplier, Type II, 1991 to 1999

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

1991 1992 1993 1994 1995 1996 1997 1998 1999

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Results – The Productive Structure

Source: Research Data. Figure 3. Electroeconogram of the Changes in the 1990 Hirschman/Rasmussen Backward Linkages, 1991 to 1999

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30

1991 1992 1993 1994 1995 1996 1997 1998 1999

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Results – The Productive Structure

Source: Research Data.

Figure 4. Electroeconogram of the Changes in the 1990 Hirschman/Rasmussen Forward Linkages, 1991 to 1999

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

1991 1992 1993 1994 1995 1996 1997 1998 1999

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Results – The Productive Structure

Source: Research Data.

Figure 5. Electroeconogram of the Changes in the 1990 Pure Total Linkages, 1991 to 1999

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

1991 1992 1993 1994 1995 1996 1997 1998 1999

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Results – The Productive Structure

Figure 6. Landscape of the Brazilian Economy, 1990

Figure 7. Landscape of the Brazilian Economy,1994

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Results – The Productive Structure

Figure 8. Landscape of the Brazilian Economy, 1995

Figure 9. Landscape of the Brazilian Economy, 1999

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Results – The Productive Structure

Figure 10. Landscape of the Brazilian Economy, 1999 less 1990

Figure 11. Landscape of the Brazilian Economy, 1994 less1990

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Results – The Productive Structure

Figure 12. Landscape of the Brazilian Economy,1999 less 1994

Figure 13. Landscape of the Brazilian Economy, 1991 less1990

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Results – The Productive Structure

Figure 14. Landscape of the Brazilian Economy, 1992 less 1991

Figure 15. Landscape of the Brazilian Economy, 1993 less 1992

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Results – The Productive Structure

Figure 16. Landscape of the Brazilian Economy, 1994 less 1993

Figure 17. Landscape of the Brazilian Economy, 1995 less1994

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Results – The Productive Structure

Figure 18. Landscape of the Brazilian

Economy, 1996 less 1995 Figure 19. Landscape of the Brazilian

Economy, 1997 less 1996

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Results – The Productive Structure

Figure 20. Landscape of the Brazilian Economy, 1998 less 1997

Figure 21. Landscape of the Brazilian Economy, 1999 less 1998

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Results – The Productive StructureTable 13. Employment Multipliers, Type I, 1990 to 1999.

Macro Sectors 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Average

Agriculture 1.31 1.31 1.33 1.33 1.30 1.26 1.28 1.27 1.27 1.29 1.29

Industry 8.94 8.84 7.96 7.76 8.58 7.57 7.94 7.39 7.74 6.89 7.96

Public Utilities 3.39 4.60 4.26 3.06 3.04 2.34 2.40 2.57 2.83 2.98 3.15

Construction 2.40 2.33 2.13 2.00 1.96 1.67 1.60 1.61 1.56 1.57 1.88

Services 1.60 1.57 1.54 1.63 1.66 1.50 1.52 1.54 1.60 1.62 1.58

Average 6.90 6.85 6.20 6.04 6.63 5.86 6.12 5.74 6.00 5.41 6.17

Table 14. Employment Multipliers, Type II, 1990 to 1999.

Macro Sectors 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Average

Agriculture 1.74 1.84 1.81 1.73 1.79 1.72 1.84 1.81 1.79 1.83 1.79

Industry 19.41 21.84 18.18 16.05 20.78 17.38 19.75 18.69 19.22 17.45 18.87

Public Utilities 16.05 21.38 19.19 16.89 20.80 14.30 15.85 16.88 17.64 19.14 17.81

Construction 6.26 6.65 5.44 4.59 5.27 4.08 4.10 4.10 3.73 3.71 4.79

Services 5.71 7.06 6.09 5.56 7.79 6.91 7.58 7.73 7.84 7.99 7.03

Average 15.66 17.82 14.92 13.21 17.18 14.38 16.25 15.55 15.96 14.76 15.57

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Results – The Productive StructureTotal Employment Generated by US$ 558.7 Thousand of 1999, 1990 a 1999

0

50

100

150

200

250

300

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

N.

of

Job

s Services

Agriculture

Industry

Construction

Public Utilities

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Results – The External SectorContribution of Exports to the Value Added, 1990 a 1999

0

5

10

15

20

25

30

35

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

%

Construction

Services

TotalPublic Utilities

Industry

Agriculture

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Results – The External SectorNet Effect of the Trade Balance Over Employment, 1990 a 1999

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

N.

of

Job

s

Industry

Agriculture

Public Utilities

Total

Services

Construction

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Results – The External SectorNet Effect of the Trade Balance Over Value Added (US$ Millions of 1999), 1990 a 1999

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

US

$ M

illi

on

s

Agriculture

Total

Construction

Pubic Utilities

Industry

Services

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Final Comments

There is a Modernization of the agricultural sector which leads to:

Increasing links with the economyReduction on its capacity to generate employment

The Industrial sector becomes more dependent on imported inputsIncreases the importance of the Service sector as “Job Creator”

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Final Comments

The Brazilian economy is probably exporting products intensive in labor and importing products intensive in capital.The Real Plan + The Openness process has probably caused a strong change in the productive structure of the Brazilian economy

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Final Comments