New Export Activities in Brazil: Comparative Advantage, Policy or Self-Discovery?

Jul 2008
This paper examines Brazil's export discoveries in aircraft, cell phones and swine meat. All cases confirm the importance of efficiency gains and sunk costs in the expansion of exports and lead to the following conclusions: both economic policy and comparative advantage played important roles in the emergence of new export activities; economies of scale were a crucial determinant of competitiveness; and a well-known brand helped to overcome information asymmetries and facilitate entry into export markets. Exporters concentrated on design, marketing, R&D, and product assembly, making coordination with suppliers an important element in their strategies. Public policy additionally had a strong if sometimes unintended influence. While governments can foster discoveries, especially in the presence of market failures, policy alone cannot produce a successful exporter.