Trade liberalization and industry: what to expect and what we have been getting

ABSTRACT The aim of this paper is to assess the impact of trade liberalization on the Brazilian manufacturing industry over the 1989-96 period. To this end, a series of indicators was built which shed light on the technical efficiency and allocational effects of the liberalization. The results obtained suggest that the impacts were, in general, positive and consistent with both predictions of the literature of the international trade and the pattern of Brazil’s industrialization. Yet, they also point to a number of challenges to be faced by State, particularly, with regard to the imperfections that affect international trade in manufacturing and that threaten the gains from trade.