Final answer:
Brazil allowing certain product components to be imported at reduced tariff rates is an example of preferential tariffs, designed to encourage assembly operations and stimulate local industries. The efficacy of such protectionist measures varies, as seen in Brazil's computer industry, which became less competitive due to these tariffs, as opposed to successful subsidies in Japan and Korea.
Step-by-step explanation:
In an effort to attract assembly operations, Brazil allows certain product components to be imported at reduced tariff rates. This is an example of preferential tariffs.
Preferential tariffs are lower tariff rates applied to imports from certain countries to encourage trade and investment. Countries like Brazil have used such economic strategies to bolster local industries, attract manufacturing jobs, and build globally competitive markets. While these policies can help emerging industries, they may also result in negative effects, such as industry stagnation and the creation of a system of dependency on governmental support, which can ultimately hurt both the domestic economy and consumer choice.
For instance, Brazil's attempt to protect its infant computer industry through high tariffs on imports resulted in a less competitive industry that lagged behind global price and performance standards. In contrast, indirect and direct subsidies in East Asia helped countries like Japan and Korea successfully establish competitive industries internationally.