Problem Statements:

To study the implication of trade in economic development and forecast the trade effects in Brazil. Brazil is well-known as one of the newly industrialized country (NIC), which is the nations that undergoing rapid economic growth (usually in export- oriented).

 From that, it often receive support from international

organizations such as WTO and other internal support bodies. As an evidence, the WTO report along with a policy statement by the Government of Brazil will be the 5th basic of Trade Policy Review of Brazil by WTO in 2009. In order to meet the new challenges presented by the current world economic slowdown, Brazil needs to press on with its efforts to give additional support to trade, including by lowering effective tariff protection, reducing the use of import prohibitions and providing greater predictability to the foreign investment.

J.F. Hornbeck, 2006 outlined that Brazils industrial policy achieved notable results for decades, but with predictable tradeoffs. The inward orientation of the ISI model protected domestic industry from global competition, diminishing market incentives to innovate and become more efficient. Trade policy was essentially administered protectionism. Brazil adopted its own version of the import substitution industrialization (ISI) model employed throughout much of Latin America in the 20th century.
Katy Hull, 2009 stated that in order to boost employment creation following trade liberalization, country advice recommends a complementary agenda, including improvements to customs, ports and other critical infrastructure, regulatory reforms, innovation and education. At WTO ministerial in Hong Kong, Brazil played a leading role in continuing to represent developing country interests in the Doha Round. The WTO remains an important forum for Brazil, which could be a major winner if barriers to agricultural trade are significantly reduced.

To identify the variables in measure the trade in Brazil. To construct the impact of trade on economic development in Brazil. To find out the implication of trade on economic development in Brazil. To forecast the impact of trade on economic development in Brazil.

This study is much significant in find out the factor that influence trade in Brazil and what are the impact of trade on economic development in Brazil. From this study, we explore the structure of Brazilian economy, the trade pattern and trade policies that adopted by Brazil.

log(GDPt) = o + 1log(NRXt) + 2log(TRDt) + 3log(FDIt) + 4log(TOPt) + 5log(HDIt) + 6log(UNMt) + et

Gross Domestic Product = economic development Natural Resources Export = factor abundance export Trade = total trade volume = (import and export) Foreign Direct Investment = investment inflow Trade Openness = ratio of export to GDP Human Development Index Unemployment Rate

Gross Domestic Product of Brazil that show economic development of Brazil is positively responds to Trade, Foreign Direct Investment, Trade Openness and Human Development Index while respond negatively to Natural Resources Export and Unemployment Rate in Brazil.

1 = -428.3367, 1% increase in NRX will decrease GDP by 428.3367 USD. 2 = 98.77380, 1% increase in TRD will increase GDP by 98.7738 USD. 3 = 127.3749, 1% increase in FDI will increase GDP by 127.3749 USD. 4 = 24228.88, 1% increase in TOP will increase GDP by 24228.88 USD. 5 = 44379.47, 1% increase in HDI will increase GDP by 44379.47 USD. 6 = -40.61183, 1% increase in UNM will decrease GDP by 40.61183 USD.

The interpretation of R2 = 0.966737 is mean 96.67% of variation in GDP are explained by the variation in NRX, TRD, FDI, TOP, HDI and UNM. Another 3.33% of variations in GDP are explained by other variables. Hence, the model fit the data well. The Adjusted Rsquared is 0.961685 and the Durbin-Watson stat is 1.865988 shows that the model fit to the data.

The t-statistic of TRD , TOP and HDI are greater than 2.069 and t-statistic of NRX is smaller than -2.069. There are statistically significant relationships between GDP, Natural Resources Export, Trade, TOP and HDI but is Trade and Unemployment Rate are not statistically significant.

 IMPLICATION:

trade has relatively small effect on economic development in Brazil. While trade openness have high effect on GDP economic development in Brazil. FORECASTING: Brazilians GDP will be majorly effected by trade openness and human development index.

Brazil economy are more open nowadays compare to previous years, which more contributed to GDP. Human development also contributed to GDP of Brazil and will continually increase Brazils GDP.

Based on my opinion, trade openness are highly affect the economic development in Brazil. GDP are increasing when Brazils economy open for international trade of manufacturing and service sector. The increase in exports of natural resources that require more capital. Brazil should reduce exports of natural resources and focus on manufacturing and services sector. Foreign Direct Investment and Trade are contribute to HDI by inflow of capital and technologies.

Several limitations of this research must be recognized in a balanced discussion of its findings. Further research is needed to improve the understanding of Brazils growth performance. The role of other variables related to institutional development, education, labor market informality, and income inequality, could also be explored in future research.