_<u>Table 9: Brazil’ structural adjustment, per cent changes in the final year between BaU and trade shocks</u>_

||||De<br>D|mand si<br>i D|de<br>d|Pi|f di||||Su|pply side|Pi|f d|i|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||Imp|ort Volumes|ome<br>of do|stc e<br>m prod|an<br>ucts|rce<br>output|o omestc<br>in dom mkts|Exp|ort Volu|mes|Dom|estic Output|rce|o om<br>output|estc|
||Full<br>Liber.|Deep<br>Doha<br>Weak<br>Doha|Full<br>Liber.<br> <br>|Deep<br>Doha<br> <br>|Weak<br>Doha|Full<br>Liber.<br> <br>|Deep<br>Doha<br>Weak<br>Doha|Full<br>Liber.|Deep<br>Doha|Weak<br>Doha|Full<br>Liber.|Deep<br>Doha<br>Weak<br>Doha<br> <br>|Full<br>Liber.|Deep<br>Doha<br> <br>|Weak<br>Doha|
|CerealGrains|-6|-3<br>-3|4|1|1|-2|1<br>1|68|14|13|5|1<br>1|-2|1|1|
|OilSeeds|-18|-8<br>-7|5|1|1|-6|0<br>0|60|9|8|20|3<br>3|-3|1|1|
|RawSugar|||0|0|0|-2|1<br>1||||0|0<br>0|-2|1|1|
|OtherCrops|23|1<br>2|1|0|0|-1|1<br>1|6|-3|-3|1|0<br>0|-1|1|1|
|Livestock|-4|1<br>1|3|1|1|-2|1<br>1||||3|1<br>1|-2|1|1|
|RawAnimalProducts|22|4<br>5|2|1|1|-2|1<br>1|5|0|-1|2|1<br>1|-2|1|1|
|OilMinerals|-6|0<br>1|1|-1|-1|-5|0<br>1|26|2|1|7|0<br>0|-4|0|1|
|LightManufacturing|48|0<br>-3|0|1|1|-5|0<br>0|159|62|61|5|3<br>3|-4|0|1|
|AgriIndustriesExp|59|2<br>1|0|0|0|-4|0<br>1|30|4|4|3|1<br>1|-4|1|1|
|WoodProductsPaper|23|4<br>4|-1|0|0|-4|0<br>1|11|-1|-1|0|0<br>0|-4|0|1|
|ChemicalsOilPr|18|5<br>3|-2|-1|0|-4|0<br>1|9|-1|-1|-2|-1<br>0|-4|0|1|
|MetalMineralProducts|24|3<br>2|-4|-1|-1|-5|0<br>1|15|0|-1|-2|-1<br>-1|-4|0|1|
|MachineryEquipment|42|5<br>3|-12|-2|-1|-6|0<br>1|11|-1|-2|-10|-1<br>-1|-5|0|1|
|OtherServices|||1|0|0|-4|0<br>1||||1|0<br>0|-4|0|1|
|Construction|-14|2<br>3|0|0|0|-3|0<br>1|8|-1|-1|0|0<br>0|-3|0|1|
|TradeCommunication|-12|2<br>3|0|0|0|-3|0<br>1|6|-1|-2|0|0<br>0|-3|0|1|
|PublicServices|-13|2<br>3|0|0|0|-3|0<br>1|7|-1|-2|0|0<br>0|-3|0|1|
|Agri|6|-2<br>-1|2|1|1|-2|1<br>1|22|1|0|3|1<br>1|-2|1|1|
|Non-Agri|21|3<br>3|-1|0|0|-4|0<br>1|21|3|2|0|0<br>0|-4|0|1|
|Economywide|21|3<br>3|-1|0|0|-4|0<br>1|21|3|2|0|0<br>0|-4|0|1|

Source: Authors’ calculations.

These demand/imports side effects are linked to the supply response to which we now turn. For producers of exportable goods, the reduction of prices in local markets ( Δ Pd) combined with unchanged or rising export prices creates incentives to increase the share of sales destined to foreign markets. This export response (shown in the columns “Export Volumes”) varies across sectors and it is linked to the pattern of Brazil’s comparative advantage and to the increase in international prices. Brazil’s comparative advantage can be ascertained by considering the export orientation (Exports / Dom Output) column in Table 8, which highlights three sectors in particular: Oilseeds, Other Crops, and the Agricultural transformation industry. These sectors – which also enjoy large jumps in their international price – experience export surges. Due to the generally positive export price shocks, other sectors join in an overall expansion of supply to foreign markets. Rising export sales more than offset, or at least compensate, reductions of domestic sales and lead to changes observed in the columns labeled “Domestic Output”. Finally output price changes (in the rightmost columns) are in between those of domestic prices and those of export prices for the simple reason that output prices are a combination (CET prices) of (generally) rising export prices and domestic prices.

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