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For This Brazilian Entrepreneur Exporting Commodities Is a Dead End

October 10th, 2009

truck_brazilBrazil as any other developing country must increase and add value to its exports, so that its foreign trade does not depend solely on sales of commodities. The future belongs to countries that invest in education, research and technology.

That was the message conveyed by the chairman of group Positivo, Oriovisto Guimarães, in a lecture to cooperative managers in the state of Paraná. The Positivo group is the country’s largest corporation in the education and technology segment.

“You cannot simply export commodities. You must export intelligence and technology as well. That is what makes a country grow, that is what promotes development,” he stated.

He said that the success of the Positivo group, currently present all over the country with 3,500 schools and 500,000 students, was the result of investing in people, research and technology.

Despite the economic growth recorded in recent years, Brazil continues to invest very little in science and technology: 1.13% of the Gross Domestic Product (GDP), equivalent to US$ 22.8 billion, whereas the United States allocates 2.68% of its GDP to investment in science and technology. In Japan, the rate is 3.44%, and in Germany, 2.54%.

In the understanding of Guimarães, Brazil has a history of extraction activities, and also of exporting primary products and commodities. As an example, the chairman of the Positivo group recalled that last year, commodities accounted for 60% of the country’s foreign sales, and manufactured goods accounted for 40%.

“We must change that around fast. We need to invest in people, in education, in research and technology, otherwise I am not so certain that we are going to be the world’s fifth largest economy, as announced recently, when Brazil won the competition to host the 2016 Olympics,” he said.

Citing data pertaining to Brazilian foreign trade, Guimarães showed how much the country loses when it exports raw material, with no added value. “In 2007, the cost per ton imported from China was US$ 1,585.25, whereas during the same period, the cost per ton exported to China was US$ 86.17. See the difference? We have got volume, but we have not got that much money,” he claimed.

According to Guimarães, a good example of how much Brazil earns when it turns raw material into products is the establishment of state-owned company Embraer. “Embraer was established with a start-up capital of US$ 5 million. Currently, the company profits US$ 306 million a year and is the global leader in the manufacturing of jets with up to 120 seats,” said Guimarães.

A Poison Called Protectionism

“Protectionism is a poison, and as such it must be fought and eradicated,” said yesterday Francisco Turra, the president of the Brazilian Poultry Exporters Association (Abef), during the 3rd European Union-Brazil Roundtable, held in Stockholm, Sweden.

After giving a detailed account of bilateral trade between the two continents, Turra harshly criticized the measures for preventing competition that have been adopted by several countries in the European Community against Brazilian products. The chicken exporting industry is among those most affected by the international barriers.

“Protectionism against Brazilian chicken is being increased even further, by means of measures such as the setting of export quotas for even more products. By adopting such measures, the European Union member countries are contributing to harm precisely the descendants of Europeans, who have a huge participation in Brazilian poultry production and exports,” said Turra.

Competitiveness

According to Agência CNI, the news agency of the National Confederation of Industries, Turra defended the sector, underscoring the quality and safety of Brazilian food production. In a document made available during the event, Turra attempted to make it clear that Brazil has attained a high level of competitiveness in chicken meat production, with high quality, meeting all of the international sanitary requirements, and proving that it is ready for the growing global demand for animal protein.

Presently, chicken from Brazil is sold in 153 countries worldwide, and accounts for 41% of overall Brazilian meat exports. According to Francisco Turra, the country has been the industry leader since 2004, and generates 4.5 million direct and indirect jobs. “The average annual growth rate of our exports since the year 2000 is 15%, despite the international economic crisis,” said the president of the Brazilian Poultry Exporters Association (Abef).

Down the Hill

In the first half this year, the export revenues of the world’s poorest countries decreased by 50% in comparison with the same period last year. So says a survey of the International Trade Center of the United Nations (UN). According to the Center, the figure clearly shows that developing nations are the most affected by the world economic crisis.

The survey reveals that during the period surveyed, revenues from exports in wealthy countries fell by 32%. In absolute terms, the sharpest decline took place in Sub-Saharan Africa, which saw its exports go down by 48.6%, compared with the first half of 2008.

Brazilian Diversification

The economist at the Africa Division of the United Nations Conference on Trade and Development (Unctad), Rolf Traeger, told the Geneva-based UN Radio that the diversification of the Brazilian economy has helped the country resist and exit the crisis.

“Brazil exports both basic unprocessed goods, such as iron ore and coffee, and manufactured goods. Thus, the impact of the world crisis on the country was not as serious as on the poorer nations, due to the fact that Brazil has a more diversified production and export structure than less developed countries,” he claimed.

Still according to the UN Radio, the hopes that emerging economies, such as Brazil and China, would absorb some of the exports from poorer countries did not come true.

Anba

Written by Joel dos Santos Guimarães

http://www.brazzilmag.com


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