Free Trade vs. Protectionism: Evidence in Brazil

Abstract

The purpose of this paper is to enlighten and explore the influence of free trade on a nation along with the contrasting implication of protectionism. This paper analyzes a specific country and diverse variables representing its economic growth and prosperity in order to analyze the impact of free trade on the country contrary to protectionism. The core objective of this paper is to analyze whether free trade has a significantly positive influence of the growth and development of an economy or protectionism would be favorable for the economy. This paper analyzes diverse variables that have a significant impact on the economy of Brazil in order to measure the impact of respective study variables of the economy. There are several approaches used for the analysis in order to represent authentic results.

Table of Contents

Introduction4

Literature Review5

Analysis of Brazilian Economic Growth5

Link between the Role of Women and Economic Growth6

Empirical Research Methodology7

Empirical Findings8

Brazil Economy: Trend Analysis8

Analysis Brazilian Fiscal Policy9

Analysis of Brazilian Monetary Policy10

Inflation in Brazil10

Exchange Rate in Brazil11

The Economic Policy of Brazil11

Economic Performance of Brazil12

Empirical Analysis of Brazilian Economy14

Forecasted Analysis of Brazilian Economy15

Conclusion16

References19

Appendix21

Outline21

Free Trade vs. Protectionism: Evidence in Brazil

Introduction

The accumulation of treasure made power possible, and power led to more wealth. The most important and desirable form of wealth was treasure, or precious metals. This preoccupation with gold and silver led to a particular kind of trade policy. Countries that had no gold or silver mines, and that were deprived of colonies where precious metals could be found, had no option other than to acquire bullion through trade. A country therefore had to strive for a favorable, or positive, balance of trade (BOP). To achieve a positive BOP, many trade policies were designed to stimulate exports and hamper imports. From discouraging imports to protectionism is but one step; thus import prohibitions, quotas, tariffs, and other protectionist measures became part of the stock and trade of mercantilist policy and recommendations.

The nineteenth century was characterized by an increasing spread of nationalism. Overbeek has held that protectionism and nationalism tend to go hand in hand, as the writings of protectionist authors clearly show. Indeed, nationalism, which promotes a state of mind whereby individuals feel that their supreme secular loyalty belongs to the nation-state, and mercantilism were closely associated. However, during the nineteenth century new dimensions were added to mercantilism. From about 1800 to 1848, nationalism was a movement of national emancipation and constitutional rights (Bruner, 2002, 60-76). After 1848, however, hostile, sinister, despotic characteristics of nationalism became more apparent. Economic nationalism, a body of economic theories and policies aimed at making the nation as independent of foreign economic influences as possible, emphasizes self-sufficiency. It loosens the ties between the economic processes taking place within a nation and those occurring beyond that nation's boundaries. And according to Overbeek, mercantilism is essentially a regime of economic nationalism (Went, 2000, 108-124).

Despite these arguments, countries continue to employ antidumping protection. Dumping is difficult to identify, and as countries have been pressed to lower their tariffs, protectionists increasingly ...