The Song of the Siren

17 Pages Posted: 26 Aug 2011

See all articles by Jorge Arbache

Jorge Arbache

University of Brasilia - Department of Economics

Date Written: August 26, 2011

Abstract

The economic cooperation between Brazil and China has grown rapidly over the last few years as a result of China’s increasing demand for Brazilian commodities, and Brazil’s escalating demand for Chinese manufactured goods. Consequently, China has become the main trading partner and the main source of foreign direct investment in Brazil. The development of this partnership has taken on a symbiotic appearance. For China, Brazil can guarantee the supply of raw material needed for it to grow and maintain its political stability. For Brazil, a partnership with China can help boost its exports, raise foreign direct investments, as well as providing manufactured goods and inputs at low prices. This article argues that the partnership resembles the song of the siren in the Homer’s Odyssey: it is seductive and irresistible, but carries with it risks that can not be ignored. That is because today’s bilateral economic relations are more and more asymmetric and benefit Brazil in the short run; however, they make it increasingly dependent on the Chinese economy in the long run. The article also argues that, to be sustainable and fruitful, this relationship requires Brazil to have a less pragmatic and more strategic approach towards China, along with a partnership agenda with broader aims and based on the principle of mutual benefits. The article also suggests an agenda for cooperation between Brazil and China.

Note: the downloadable document is in Spanish

Keywords: Brazil, China, trade, investment

JEL Classification: F1, O2, P4

Suggested Citation

Arbache, Jorge, The Song of the Siren (August 26, 2011). Available at SSRN: https://ssrn.com/abstract=1917593 or http://dx.doi.org/10.2139/ssrn.1917593

Jorge Arbache (Contact Author)

University of Brasilia - Department of Economics ( email )

Campus Universitário Darcy Ribeiro
Asa Norte
Brasília, Distrito Federal 70910-900
Brazil
+ 55 61 8194 4529 (Phone)

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