Economic growth, social development and crisis management: recent evolution of the auto industry in Brazil

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The paper discusses the growth of the Brazilian automotive industry relating it to socio-economical conditions of the country. It also discuss the 2008-9 crisis and the policies undertaken by Brazilian government to cope with it. In brief, automotive growth is linked to the country’s economic growth led by stabilization of the currency, income distribution and raise in real wages, a very comfortable situation of internal and external debts, the increase of credit conditions (credit level are still low in the country). Virtually all passenger cars produced are flex-fuel, that is, run both with gasoline or ethanol; even gasoline has around 25% of ethanol in its composition, with no state subsidies: production is competitive regarding gasoline. Energetic and C balance of Brazilian ethanol is very positive; it is made of sugar cane, not of corn or food crops like in the US or other countries. That raises Brazil as a very “green” player in the auto industry.