FOOTWEAR: The evolution of export in value in FHC and Lula’s governments

                        The evolution of footwear export and its parts – chap. 64 of NCM – in Fernando Henrique Cardoso (FHC) and Lula’s governments presents results which should be reflected, because the approach regards to a period that has initiated with positive expectation, from the level of US$ 1,498 billion in 1995, with some regressions during three years consecutively, oscillating recuperation in the last three years of FHC’s government and initiation of an ascendant process from the beginning of Lula’s government until surpass, for the first time in history, the limit of US$ 2 billions in 2007.
                        The separation of the results for government periods does not have a special meaning, maybe it is only an expression, however it is necessary to take into consideration that in Lula’s administration the government was pressed up to create specific credit lines to the segment, with resources of the Worker's Support Fund, and also to warrant Unemployment Insurance on special conditions for workers that were unemployed by footwear industry of Vale do Sinos.
                        Would the period between 2003 and 2007 be prejudicial to footwear industry, vis-à-vis the period 1995 to 2002, taking into consideration only foreign market?
                        Data show – see table 1 below – that Brazilian footwear export in FHC’s government had an oscillating behavior with a declining tendency, as we can see in frames below, in which 1995 is taken as basis = 100.
                                  
Frame 1 – FHC Government export rates (1995 to 2002)

Years	Rate
1995	100
1996	110
1997	110
1998	92
1999	90
2000	108
2001	112
2002	101

        Organização/ Organization: Courobusiness

                        However, the period between 2003 and 2007, five first years of Lula’s government, present, on the contrary, a solid and increasing behavior, as we can see in the frame below, in which 2003 is taken as basis = 100. See also in the graphic 1, after the rates).

Frame 2 – Lula Government export rates (2003 to 2007)

Years	Rate
2003	100
2004	117
2005	122
2006	120
2007	125

                                Organização/ Organization: Courobusiness

 

                       It can be verified, preliminarily, that the last five years were the best years for the footwear industry in the matter of foreign trade. Numbers are higher than those verified in the previous eight years. It is known that such comparison can be inadequate, and it is in part, because of the distinct international settings of each period. In the health of FHC period, the world watched some successive crisis in Mexico, Russia and Asia which echoed in worldwide market and obviously in Brazil. In 2002, internal economy was also reached by politic speculations. The last five years – Lula’s government – on the contrary, stood free from international crisis that could affect foreign market, however, for all that, footwear industry went through this period with the eternal speech of unfavorable exchange. (See graphic 2, curve of export in the period).

                       
                       If export had a good development, how would import develop on the same settings? Numbers show that the years in which import surpasses US$ 200 millions barrier are those in which cambial relation shows the Real with a good valorization, which is an unfavorable relation according to exporters. This occurred from 1995 to 1997, three first years of FHC’s government, and in 2007, fifth year of Lula’s government. (See graphic 3, curve of import in the period).
           

                      

It can be observed, in conclusion, that Brazilian footwear export, in spite of unfavorable exchange relation, of the input of Chinese products in Brazilian traditional markets, of the high internal taxation and of the high capital cost, has do capital, has satisfactorily developed in the last 13 years. Import, as seen, increases whenever cambial relation shows a well valorized Real with regard to market expectations. The barrier of US$ 200 millions/ year of export – which has occurred from 1995 to 1997 – was one decade long to be surpassed again. Nevertheless, footwear import is in a reasonable percentage when it is compared to exported values, about 10.9%.
                        It must be highlighted that every data have reference to total values of the chap. 64 at NCM. For a more accurate evaluation, should be suggested to compare similar products inputs and outputs, because this could qualify the analysis, since the chap. 64 incorporates all kinds of footwear, from the most common to the most sophisticated, besides their parts.

Table 1 - Footwear: Foreign Trade
- Values in US$ millions –

Years	Export	Import
1995	1498	211
1996	1650	211
1997	1594	206
1998	1387	116
1999	1342	54
2000	1617	48
2001	1686	56
2002	1518	50
2003	1625	54
2004	1903	72
2005	1984	122
2006	1966	149
2007	2038	222

Fonte/ Source: MDIC – Alice

 

Revista Courobusiness, Ed. 56 – Jan/Fev 2008