How Brazilian international competitiveness changed after the Inovar-Auto policy: comparison of the international competitiveness of auto-parts in Brazil with other countries

Publication Type:

Conference Paper

Source:

Gerpisa colloquium, Paris (2019)

Keywords:

auto policy, Automobile parts, Brazil, DID analysis, INOVAR-AUTO, international competitiveness, International Trade, Rota2030

Abstract:

How change Brazilian international competitiveness after Inovar-Auto: comparison analysis of international competitiveness of auto-parts in Brazil and other countries

Toshiyuki Baba, Hosei University, Japan

Key words: Inovar-Auto, Rota2030; Automobile parts; international competitiveness; auto policy; DID analysis; international trade;

The aim of this research is to evaluate Inovar-Auto, Brazilian auto policy since 2013 (2012/10/3 7819) by a view point of the change of international competitiveness of Brazilian auto parts.
Inovar-Auto was came to close in 2017. The aim of this policy was to promote international competitiveness of the Brazilian automobile industry by raising national contents, enhancing quality, safety and ecology, increasing new R&D investments and fostering cutting-edge innovative technologies.
Baba (2016) studied international competitiveness of auto parts in Brazil, Mexico, India and South Korea between 1992 till 2014. He suggested development model of auto parts in emerging economies and classified tow type of paths. One was Leaped Development Model and another was Dilemma Model. His analyze showed that international competitiveness of auto parts in Brazil was decreased, otherwise those of South Korea, Mexico and India were recently increased. How did the Inovar-Auto affect to international competitiveness of auto parts in Brazil? By Inovar-Auto, did Brazilian supporting industries grow well? This is the main research question of this study. Another question is necessity of including supporting industries such as auto parts manufactures for auto policy. The incentive target of the Inovar-auto is only for automobile manufacturers (OEMs). That means the target is only final product manufactures. Supporting industries could not get direct benefit by this auto policy. In another countries, it is normal to include both automobile manufactures and supporting industries for one auto policy. Someone says that the policy effects for automobile manufacturers affect to supporting industries by trickle-down effect. The author would like to consider trickle-down effect exist or not in auto policy through this research.
In order to evaluate the Inovar-Auto, the author uses three indicators. One is a Global Competitiveness Index (GCI) of Brazilian automobile parts. The formula of GCI is as follows; GCI = (export – import) / (export + import). Second is an auto parts import per one automobile production. The author abbreviated this indicator as IPP (Imports of automobile parts Per one automobile Production). The last one is an auto parts export per one automobile production. He abbreviated it as EPP (Exports of automobile parts Per one automobile Production). The reason to use unit trade values per one automobile production is to avoid an effect by economic conditions. Though trade volumes themselves are strongly affected by economic conditions, by dividing one automobile production, they will show the structure of Brazilian auto industry. Import auto parts volumes per one automobile production means how many auto parts import need for one automobile production. Export one is another side of that. These three indicators are calculated from 2008 until 2017. Then calculated two average. One is between 2008 and 2012, which means before Inovar-auto. The other is between 2013 and 2017, which means after Inovar-auto.
For comparison, the author prepare six groups. First one is just average values of all countries of automobile production. Countries of automobile production of certain volume every year were thirty six according to OICA automobile production statistics . Based on automobile production volume of 2017, the author set two groups, “Top 5 group”, and “Top 10 group”. As of 2017, order by automobile productions is as follows; first China (production volume of 29 million units), second USA (11 M), third Japan (9.7 M), forth Germany (5.6 M), fifth India (4.8 M), sixth South Korea (4.1 M), seventh Mexico (4.1 M), eighth Spain (2.8 M), ninth Brazil (2.7 M) and tenth France (2.2 M). Based on GDP per capita, he set three groups, “High economies (22 countries)”, “Higher middle economies (10 countries)”, “Lower middle economies (3 countries)”.
Results of this study are as follows: international competitiveness of Brazilian auto parts before and after the policy, Inovar-Auto; Dependency structure for foreign countries to make automobile in Brazil before and after the policy; existence of trickle-down effect in an auto policy. These results are useful to make and to practice the effective auto policy.

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