Government and Business Case Study

Brazil- The Emerging Destination for FDI

OR

Abstract:
From 2004 onwards, Brazil achieved a steady rise in foreign direct investment (FDI) inflows. The country secured a 79% increase in FDI from 2004 to 2005 and from then on FDI was rising astonishingly. Almost all favourable factors for attracting FDI were present in Brazil. According to analysts, impressive macroeconomic performance was a prime reason for increasing FDI in Brazil. Market liberalisation was another crucial player in ensuring high FDI growth. The increasing global demand for a wide range of Brazilian products - from iron ore to soya beans, also encouraged foreign investors to invest in the country. Presence of a rich natural reservoir, rising investment in research and development and government initiatives were other major reasons behind the surge in FDI in Brazil. While other Latin American countries were losing their attractiveness, Brazil startlingly was drawing more and more FDI. In the 2006-2007 fiscal year, Brazil had become the largest FDI recipient amongst all Latin American countries. However, the country also had to overcome some serious stumbling blocks to emerge as a giant FDI destination. It remained to be seen whether Brazil could win over her problems to realise the dream of moulding her as a global leader in FDI attraction.

Pedagogical Objectives:

• To capture Brazil's move into the league of leading global FDI destinations.
• To explain the stimulants of the FDI surge in Brazil.
• To highlight the factors posing a challenge to Brazil's FDI potential.

Keywords :  Foreign direct investment, Export promotion, Trade liberalisation, Mercosur, Telebras, Integrated trade control system, Digital television broadcasting, Applied technology, Public-private partnerships, Investe Brazil, Natural resources, Alternative energy resource, R&D (research and development) industry, Rigid labour markets, Business laws and regulations