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Comparing Mandelson's Speech On Brazil And The Global Economy

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In his speech on “Brazil and the global economy” at the School of Economics and International Relations in Sao Paulo Peter Mandelson (2006), the EU Trade Commissioner at the time, noted the following:
“When Brazil, and India and China turned their backs on self-sufficiency in the 80s and 90s, the WTO system embodied their hope of trading their way out of poverty. And it guaranteed the open markets they needed to leverage their spectacular growth.“
What he meant is that an open economy allows all countries to achieve greater prosperity. The European Commission states on its website that Brazil, the largest Latin American economy, is an important trade partner for the European Union as it is the biggest single exporter of agricultural products coming to the EU. On the opposite side, the EU is Brazil’s first trading partner (responsible for 21.4% of its total trade) and the majority of foreign direct investments (ca. 50%) have its source in the EU. However, the European Commission notes that even nowadays the Brazilian market is relatively strictly protected with an …show more content…

Once a country opens its economy, the domestic price shifts to the world price. The world price is the price of a good or service that predominated in the world market (Mankiw and Taylor 2014). Terazono (2014) notes that “in many industries, a dominant producer can withstand the vagaries of the market and has the ability to influence the market price.” However, the assumption is made here that “all firms are assumed to be ‘perfectly competitive’” and take the prices they observe in the market as given. Hence, they are said to be price takers in the world economy (Baldwin and Wyplosz 2009, p.103). International trade affects the economic welfare of both exporting and importing

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