Determinants of Brazilian exports of ethanol

Abstract

In recent years, ethanol, which represents a major renewable energy alternative for both the reduction of oil dependence and the mitigation of environmental and climate problems, has prompted several countries to use it in combination with gasoline. Thus, there has been a great increase in world demand for this biofuel. In this context, this study aims to investigate the determinants of the performance of Brazilian ethanol exports in international trade of this product. In the theoretical framework, a study of the theories of international trade and the term “competitiveness” was performed. Subsequently, in the analytical methodology, the Constant Market Share model was described. The results show that the growth of international trade of ethanol and the gain in competitiveness were the main factors responsible for the high performance of Brazilian exports of this product from 1999 to 2008, noting that these same factors were the responsible ones for the decline in export performance in later years, and revealing the extreme vulnerability of competitiveness and the trade of ethanol to climatic conditions, the internal and external credit, exchange rate changes, the change in the price of sugar, and the level of domestic demand for alcohol.