ESTIMATION OF BRAZILIAN INTERNATIONAL CLUSTERS TRADE

Abstract

This study aims to empirically investigate Brazil’s international trade with its
commercial and political partners and the maximum likelihood (ML), Poisson PseudoMaximum Likelihood (PPML) and the GMM system estimators by estimating a trade
model with continuous of goods. We investigated the performance of Brazilian exports
to the four intercontinental clusters: Brazil-Mercosur, Brazil-Brics, Brazil-Euro zone and
Brazil-United States trade. The ML and PPML estimators report significant and consistent estimates with the gravitational literature, that country incomes and populations
contribute to increasing trade, while higher transport costs tend to inhibit trade flows.
Exchange rate volatility does not prove to be an impediment to trade, at least in the
static model. The border-effects does not play an important role in determining the pattern of trade between Brazil and its regional partners, suggesting that intercontinental clusters may be essential to the Brazilian export flows, a fact confirmed by the results
reported by the GMM system estimator.