As Brazil’s balance of trade widens to a historic high, data from the Institute of Studies for Industrial Development (IEDI) has shown the trade deficit generated by imports of medium and high-technology products reached US$46.8 billion in the first seven months of the year. That figure is 16.3 percent higher than in the same time period in 2012.
According to the Secretariat of Exterior Commerce, Samsung, the Amazonas branch of the South Korean electronics maker, was the company that imported the most in 2012, second only toPetrobras, as published by O Globo.
Brazil only achieved an US$18.9 billion surplus in its 2012 trade balance from exporting low-tech industrial products, which include wood-related goods, pulp and paper, food, beverages and tobacco. Experts believe this shows Brazil, a big player in the commodities market due to its natural resources, is still highly dependent on foreign-made high-tech products.
Ironically, the driving force behind Brazil’s boom in recent years has been fueled by commodities like iron-ore, and not industrial production, which the country had made its official priority as it embarked on import substitution industrialization policies aimed at creating a domestic industry in the 20th century.
Those aggressive industrialization policies did not create an industry that is entirely competitive with large global players. The country’s high labor costs, labyrinth-like bureaucracy, complicated tax system and poor infrastructure have driven industrial production costs up, so that importing becomes cheaper.