Latin American Exports: Has Brazil displaced them?

ITURRALDE, IVAN; FLORENSA, MARCELO; RECALDE, MARÍA LUISA

Port of Spain

Conferencia; SALISES 11th Annual Conference - Turmoil and Turbulence in Small Developing States: Going Beyond Survival; 2010

Sir Arthur Lewis Institute of Social and Economic Studies, The University of the West Indies, St. Augustine , Trinidad

This study makes use the gravity model in order to determine whether Brazil’s exports growth has negatively affected the volumes exported by other countries in the region. Estimations were made to define: a) whether the displacement effect has been uniform over the whole period; b) whether it has been the same one for all exporting countries; c) whether it can be verified that the importer is a country belonging to the LAIA and d) whether part of the effect has been compensated by redirecting exports to Brazil by the other ten Latin American countries. The main conclusions for the 1989-2006 period is that there is no evidence of the displacement effect on the part of Brazil. However, such effect appears as relevant as from the year 2000 if two sub-periods are taken into consideration. Besides, if the Latin American countries are split into two clusters, it may be seen that there was only one displacement effect on the exports of the so-called cluster of monoexporting countries. Finally, limiting the importing countries to members of the LAIA, the results show that for the whole period, there was a displacement effect as the consequence of Brazil’s exports rise. If the analysis is limited to manufactured goods, the displacement effect is higher.