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economy. It accounted for 600,000 jobs and a quarter of Brazilian exports in 2005 (ibid). A possible risk on the trade may be the uncertainty of the supply chain (Farina & Viegas, 2003). All supermarkets have informal agreements with wholesalers, who also carry the added responsibilities of waste control and supply management (ibid). These wholesalers moreover prefer to supply small and open-air traders, which in turn contributes to their longevity in spite of the retail giants. Associations have been created, too, to ultimately guarantee competitive prices and reduce waste, creating a win-win situation for both retailer and wholesaler (ibid).

The gradual proliferation of multinational firms

Now is an auspicious time for multinationals to consider entering the robust Brazilian market due to economic stabilization, the spate of liberalization and the growth of the consumer market, as Farina & Viegas (2003) explains. Firstly, Brazil has become the de facto headquarters for the Southern Common Market, commonly known as the Mercosur. Brazil’s GDP, in fact, was 62% of the Mercosur’s GDP, and its imports accounted for 60% of Mercosur’s. Mercosur, it must be noted, did not fully live up to its ideals (ibid). Regional specialization naturally led to oftentimes painful change in its member’s economies (Farina 2001). As a result, protectionism became the common response. It is a step backward and contributes to the hindrance of integration and regionalism of the agricultural food trade (ibid).

Secondly, although by 2000, 8 of the 10 largest food companies in Brazil were already multinationals, the arena is so dynamic as it is far from becoming saturated with the 55 largest chains are responsible for half of total sales (Farina 2001). The U.S., furthermore, has long invested in Brazil’s food industry. Since the liberalization of investments laws and the stabilization of the economy, investments were increased dramatically (Blaauw, 2009). American companies usually compete against their European counterparts like Unilever, which is next largest food company in Brazil with sales of $1 billion (Farina & Viegas, 2003). Thirdly, although Ken Maxwell opined that “Mercosur has failed for all sorts of reasons” (The Council on Foreign Relations, 2009), Brazil has the ability to trade more efficiently and become the regional leader that it is currently touted to be (ibid). Fourthly, the low-income elasticity of consumers makes this industry less sensitive to economic fluctuations (The PRS Group, 2008). Lastly, the capital goods and food industries have invested in cross-operational plants across the nation’s members which “allows for scale and scope economies, and for tracking customer preferences and supplier trustworthiness” (Farina 2001).

The pattern for international production has three determinants: firstly, the competitive of companies in relation to the local industries; secondly, the nature of the location that enhances the value of these competitive advantages; and thirdly, the extent to which the market for these benefits are exemplified by the company itself (Newswire Today, 2006). Thus, one can now see the appeal of Brazil to foreign capital which is the considerable market size, a base point to other Mercosur countries, economic stability, manageable labor fees, tax incentives, and ready access to resources. In some aspects, the multinational by way of mer