The developing countries and international trade

During the mid-1990s the Latin Americans countries intensified exchanges with other nations. This agenda was due to the need to obtain foreign exchange to make payments of the growing external debt and at the same time ensure credit from the international financial community. It also served to generate foreign exchange necessary to carry out imports for the modernization of the industrial park.

In Brazil, the existence of such an agenda is observed int that period due to the domestics policy decisions made through the establishment of incentive mechanisms for exports which exonerated exportable primary products from taxes. In this way, the labor-intensive national products are exchanged for industrialized capital-intensive products from anothers countries.

Inter-regional and inter-industrial exchanges are carried out according to the theories of international trade. They involves primary products, especially those of labor-intensive agriculture that are interchanged by the industrialized capital-intensive products. In this mechanism, agriculture acts by producing and supplying mainly agricultural commodities to industries and tradings, and these, in turn, carry out the process of processing, transforming them into food products or inputs to other industries, in addition to promoting exports.

This model is observed in the soybean trade, in part because it is a product that has shown a considerable increase in its consumption due to its ability to convert vegetable protein to animal protein. The increase in soy consumption is due to the change in food habits in some countries, especially in China, and the increase in income in others whose income surplus is directed towards the acquisition of food products. As a commodity-to-vegetable protein converter, the primary products of the soybean sector in particular continue to present a considerable degree of interest in international trade.

The intensity of international trade involving the product can be partially explained by the theories of trade among nations, especially by Heckscher-Ohlin’s theorem. Through that theorem, the exchange occurs between intensive products, in their value, that are abundant on its existing factors of production by products whose factors of production are scarce.

So, what is the causal relation that explains the intensity of soybean exports, considering the incentive policy instituted that aims to expand the stock of foreign exchange currencies?

Soybean production in Mato Grosso is capital intensive. It is decomposing into highly productive lands, specialized technical labor in conducting scientific research and its application in the activity. Both factors of production are abundant in the Brazilian territory although there are minimal restrictions on their mobility. Considering that the relative quantity of capital exported in terms of soybeans is higher than the relative quantity of exported labor, so, according to the Heckscher-Ohlin theory theorem, the State of Mato Grosso is a net exporter of capital-intensive products. Thus, the equalization of factors occurs, justifying the exported intensity of the product.

The increase in production and productivity of soybeans and other crops in Mato Grosso is the result of the application of management techniques, improved in research conducted by national research institutions. From this observation comes the assertion that soybeans occur with the intensive use of capital rather than labor. Knowing in which factor there is abundance and verifying the relative quantity of the factor of production in relation to imports, it is justified by the analysis, the intensity of the international trade existing between the State of Mato Grosso, the rest of Brazil and the rest of the world. Since soybeans are produced under a capital intensive production system, their export in grains already provides the economic advantage. However, the production of higher value-added goods through the processing and processing of semi-ready or ready-to-eat food items can add additional benefits. These advantages are reflected in international trade operations as well as in the impact on the production value of the national, regional and local economy, due to the dynamism that would be imposed on downstream sectors that are interrelated with the activity.

An empirical analysis that verifies the existence of a differential in the dynamism of the economy can prove this specific case of international trade. This analysis should consider the beneficiation of soybeans produced and, subsequently, the industrialization, distribution and marketing of consumer items obtained as a policy option to boost the national, regional and local economy.

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