Protectionism and the productivity of the automotive industry in Brazil

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

This work project provides evidence on the positive effect of trade liberalization on productivity growth in the Brazilian automotive industry. I use data before and after trade liberalization. The positive effect of trade liberalization found here supports the idea that the adoption of higher tariffs on imports in this sector is not justified. This idea is also supported by the fact that production increased since trade liberalization. Higher tariffs on imports of vehicles are one of the measures of the recently announced plan Brasil Maior. According to the results found here, the effect of this new protectionist measure might be the loss of productivity and efficiency of the industry in the long run and the supply of expensive products in the domestic market.