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Transnational Companies and Changes in Comparative Advantages in Brazil

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  • Cinquetti, Carlos Alberto

Abstract

The paper examines the impact of Transnational Company (TNC) affiliates upon the slow transition from import substitution to export expansion in Brazil from 1967 to 1988. Relying on general equilibrium approaches to TNCs and international trade, we propose a regression model in which the change in revealed comparative advantage is explained by a set of trade theory variables together with a variable standing for TNCs. The idea is to control for sectors performance through their common causes, instead of completely disregard firms’ location patterns. The variables are in panel data form: twenty manufacture sectors in four periods. Besides some revealing results associated with the traditional trade theory variables, analysis showed that foreign affiliates contributed to the slow export expansion in manufacture. Additional analyses managed to uncover their causes: the anti-trade location pattern of these companies that outweighed their positive effect on exports conferred by ownership advantages.

Suggested Citation

  • Cinquetti, Carlos Alberto, 2003. "Transnational Companies and Changes in Comparative Advantages in Brazil," Conference papers 331129, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331129
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