Introduction
The term trade is in most cases used in reference to the exchange of ownership of goods as well as services from one person to another. When used in the context of international trade it refers to exchange in goods, services as well as capital across international territories. With reference to most countries, international trade makes up a significant share of gross domestic product. This has influenced the increased concerns of its economic, social as well as political importance to a nation. Industrialization, advancement in transportation, globalization, international corporations as well as outsourcing are all factors that have had significant influence in the increased development of international trade systems. Its increased growth has as well been influenced by the fact that it increases a nation’s array of good and services thus ending their limitation to the goods and services that are only produced within the nation’s territory.
The fact that international trade involves exchange across boundaries results in the imposition of tariffs by the authorities concerned for the best interests of the nations involved. The United Arab Emirates has maintained a market system that is open and free with increased links to international economy. It has traded with industrialized nation in Europe as well as Asia influenced by the discovery of oil in UAE. Its international trade has as well been facilitated by the fact that the nation has modern infrastructure as well as improved port facilities. Though the nation’s major export it oil it as well deals in other non-oil exports such as aluminum. Brazil on the other hand has experienced increased overall trade flow with increase in imports. This includes increased import rates from its trading partners in Europe as well as Asia. Brazil has as well increased its imports of aluminum from the United Arab Emirates (AMEinfo.com, 2004).
Challenges faced in the trade
International trade involves increased challenges when compared to domestic trade a factor that has highly been attributed to the difference in the process involved in its execution. This is in light of changes in demographics, government influence, infrastructure, economics as well as communication. In this regard international trade between the United Arab Emirates and Brazil in aluminum is as well faced with such challenges.
Demographics
Demographics can be viewed as data that involves the characteristics of human population. A demographic profile provides enough information on a targeted market group thus enabling the creation of a mental picture of the group’s hypothetical aggregate. Thus a demographic profile in the context of marketing is made with the objective of determining the different segments that exist in the given general population. It is as well made with the objective of creating a picture that is clear and complete of the characteristics of a member of each segment identified (Baer, 2001).
• The demographic profile of Brazil shows a high percentage between the ages of 15-64.
• In respect to gender this percentage has a higher female composition
• The society has a single Brazilian ethnic group.
• In terms of race the profile attributes Whites and Pardos with high compositions followed by the Blacks and Amerindians.
• The income levels of the Brazilian population are low
Such a demographic profile poses a challenge of labor deficits thus posing challenges in the expansion of the aluminum industry. However, the labor deficit challenges the expansion of the industry in the interior of Brazil while it supports expansion at the coastal regions where the population is highly concentrated.
Image representing the Brazilian demographic profile.
Cultural dimensions
Both UAE and Brazil have similar cultural dimensions in respect to Hofstede analysis. This is in respect to high uncertainty avoidance ranking implying high concerns to rules, regulation as well as controls. This as well implies that both societies are committed to their traditions and norms. Their traditions support strong work ethics while large power distance inequalities of power and wealth have been allowed to grow within their societies. The societies have collectivistic cultures in which loyalty has paramount importance placing emphasis on family values and togetherness (Baer, 2001). In both societies males are considered the dominant sex expected to take care of finances.
Government
The Brazilian government is a federal one with the president serving as the head of state as well as government. The government exercises executive power while legislative power is vested on both the government and the two chambers of the national congress. The involvement of the government in international trade is in the imposition of tariffs as well as diplomatic harmonization of trade means. The major aspect that has influenced the government’s involvement in the trade between UAE and Brazil is the increasing growth of the aluminum industry in the country. As such the government has been involved in the harmonization of trade means between the two nations. This has been experienced in the sense that both nations have participated in negotiations that are aimed at improving the diplomatic relation between both nations. The growth of the aluminum industry and its flourishing nature influences the search for means of developing the industry influencing the search for cheaper sources of acquiring the aluminum. The growth of the aluminum industry poses a challenge to the trade between UAE and Brazil in the sense that the government seeks for other sources in which the commodity can be accessed cheaply. The challenge posed in this is that UAE can loose the market of Brazil in selling the aluminum as the government influences the search of cheaper markets (Business Intelligence-Middle East, 2008). The flourishing nature of the aluminum industry in Brazil poses another challenge of government involvement in the industry in an aim of revenue acquisition. This is in the sense that the flourishing nature of the industry influences increased participation by citizen’s thus high revenue creation within the industry. As such the government might be involved in an aim of revenue collection.
Physical and communications infrastructure
The involvement by the government in nurturing of the flourishing trade has influenced the growth of both physical and communications infrastructure between United Arab Emirates and Brazil. This is based on the fact that the aluminum industry in Brazil is highly promising while UAE depends highly on its exportation. While both nations are situated in different parts of the globe influences the development in both physical and communications infrastructure to facilitate the trade by offering avenues of interactions. This has facilitated the growth of air transport in both countries with advancements in communication means such as the use of internet. However, these developments have not been extensively spread to the varied parts of both nations. This implies that a challenge is faced in facilitating the trade in areas of both nations that are not well served by the physical and communications infrastructure. The challenge in this is in the transportation of the bulk commodity to different parts of the nations while communication is affected owing to poor communication infrastructure in such regions (Baer, 2001).
Economics
In respect to economics the economy of Brazil is viewed as to have an upward evolution of competitiveness. It is as well viewed as to have an increase in purchasing power parity. In this regard the economy of Brazil can be deemed as highly developed while it is highly influenced by its sophisticated technological sector. In the same regard the economy of UAE is as well flourishing while it is highly influenced by the nations export sector. However, the financial crisis that has recently rocked the globe has affected the financial potential of most people within the two nations. This poses a challenge to the trade between UAE and Brazil in respect to the aluminum international trade as it affects the possibility of citizens to participate in the trade. This is in the sense that their economic potential is affected thus affecting their potential to participate in the international trade. The impact of the economic recession have as well been felt in respect to economic growth affecting both nations thus posing a grave challenge to the international trade between both nations. This is in the sense that both nations are on the quest of increasing their economic potential following the economic recession. As such both nations view any avenues of increasing their economic potential such as the aluminum trade. This poses a challenge to the entire trade in the sense that it facilitates the search for other avenues of aluminum acquisition that are cheaper offering increased profits to both nations (Business Intelligence-Middle East, 2008).
References
AMEinfo.com. (2004). UAE inks historic bilateral agreement with Brazil and Argentina. Retrieved January 5, 2011 from <http://www.ameinfo.com/41612.html>
Baer, W. (2001). The Brazilian Economy: Growth and Development. Westport: Praeger Publishers.
Business Intelligence-Middle East. (2008). Brazil planning permanent trade exhibit in UAE. Retrieved January 5, 2011 from <http://www.bi- me.com/main.php?id=17660&t=1&c=35&cg=4>
