Trade openness and structural change in the Brazilian motor industry

This article aims to classify and analyze the efforts at structural change made in the Brazilian motor industry between 1990 and 1996, seeking to relate them with the economic policy measures which had most impact on the sector. The study begins by examining the explosive increase in domestic demand for motor vehicles, its determining factors, and its main implications, especially the achievement of efficient scales of production and the initiation of a wave of investments which has been further intensified in the last three years. It goes on to study the increase in the technological dynamism of the sector, which is partly the result of these new investments. A series of changes relating to the new international linkages of the Brazilian motor industry are then analyzed, since as a result of greater trade openness there has been a significant increase in the coefficients of importation of parts and components or finished vehicles. Finally, an analysis is also made of some aspects of the Motor Industry Regime, whose adoption has had repercussions on the external linkages of the motor industry not only in the short term, by establishing import barriers, but also in the long term, by bringing it home to the big firms in the sector that they must make investments to expand local production and maintain higher levels of competitiveness.