Export Coefficient – A Continent Called Brazil

Measured by the relationship between the FOB value of industrialised products exports (manufactured and semi-manufactured), and the industrial production value (manufacturing industry), the Brazilian industry’s export coefficient has always been historically low. This can be explained, on the one hand by the nature of the economy – a country of continental dimensions, with a large internal market – and on the other hand, by the fact that it was only late that the Brazilian industrial policy promoted the export of industrialised products.

The first tax incentives (in fact only exemption of internal taxes and drawback on importation tax paid on input) were created in the second half of the 60`s. Later, from the 70`s onwards, the exports promotion system was gradually extended. Besides tax incentives, there were introduced: the fiscal credit for value added taxes (federal tax on industrialised goods, IPI, and a state tax on the movement of goods and services, ICM), representing a subsidy to exportation; credit lines for the exportation of manufactured products, also with subsidies, and the exportation programs administered by the Commission for the Concession of Tax Benefits to Special Export Programmes (Befiex) and by the Commission of Incentive to Exportation (Ciex).

In the mid 80`s a process of gradual reduction of fiscal and credit subsidies was initiated, compensated by the elimination of certain internal surcharges and de-burocratisation of exportation procedures. Following this, in the foreign business policy reform of 1990, the Befies and Ciex programmes were eliminated, along with the main lines of credit to exportation. New instruments of financing – Export Financing Programme (Proex) and Financing for Export of Capital Goods (Finamex) – would only be created in 1991-92. Other tax incentives were introduced between 1992 and 1994, amongst them the so-called internal drawback (compensation of internal taxes paid on inputs incorporated in exported products) and the fiscal credit of fiscal contributions of the Social Integration Programme (PIS) and the Contribution to Fund Social Security (Cofins).