Diplomatist Magazine Diplomatist September 2019 | Page 25

I n d ia & t H E W O R L D
Brazil and India
A peculiar relationship between
two peculiar economies
BY Renato Baumann*
I
n 2018, Brazil and India celebrated 70 years of the
establishment of their diplomatic relations. Over such a
long period the two economies have experienced quite
diverse paths.
The GDPs in the two economies are rather similar in value,
but with increasing distance in recent years. In constant 2010
US dollars both economies had on average in 2014-2016 a
GDP worth US$ 2.3 trillion. The average in 2016-2018 in
Brazil remained the same, whereas in India this value went
up to US$ 2.7 trillion[1].
Since there are five times as many Indians as Brazilians,
this affects the comparison in per capita terms, with significant
differences in demand patterns in the two cases.
This is mirrored, among other things, in the productive
structure of the two economies. Agriculture is more than three
times more important as a share of GDP in India (18%) than
in Brazil (5%). This should not be a surprise, given that the
percentage of arable land cultivated in India (53%) is much
bigger than in Brazil (10%).
As per the involvement with international trade, the
two countries have also experienced different trajectories.
Merchandise trade as a share of GDP was rather similar in the
two economies in 1990 (12% and 13% in Brazil and India,
respectively). In 2016 those shares had evolved to 18% in
Brazil and no less than 28% in India.
The net balance in merchandise trade also differs in the
two cases. Brazil systematically presents an overall trade
surplus, whereas the merchandise balance is historically
negative in India.
This leads to another peculiar feature that differentiates
the two economies. In India the deficit in merchandise trade
is systematically compensated by the export of services.
In the two countries, the service sector is predominant in
the productive structure, accounting on average, in 2014-16,
for 72% of GDP in Brazil and 53% of GDP in India. However,
since at least the year 2000, the share of external trade (exports
and imports) in services on GDP has been systematically 2 to
3 times higher in India in comparison to Brazil.
A possible reason for that is the type of services produced
in Brazil: mostly focused on final consumption in the domestic
market. In India, differently, a good deal of services provide
support to productive activities, hence are more easily exported.
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 9 • September 2019, Noida • 25