Authors: Fabrice Hatem and Anne Miroux
Editor: IMD, March 2009
Assessing the performance and potential of Brazil as a FDI destination
One of the most striking features of globalization is that a growing share of companies’ investment projects are implemented abroad. The capacity to attract the resulting international investment flows appears therefore to be an important component of national competitiveness. This chapter aims at shedding some light on this issue by providing an overview on foreign direct investment (FDI) to Brazil as well as on the presence of foreign companies in the Brazilian economy.[i]
FDI flows and stocks have markedly increased over the past 15 years, making Brazil the largest host country for foreign investment in Latin America and second only to China among developing countries. The following sections will explore the main enabling factors of this encouraging trend, including Brazil’s competitive advantages—such as its large and expanding market coupled with its abundant natural resources and its relative openness to FDI. The composition of FDI located in the country by sector, mode of entry, and nationality of the investor will be analyzed in detail, together with the challenges that lie ahead for Brazil in maintaining and consolidating its status as a top FDI destination.
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[i] This does not however provide evidence or elements of debate regarding the impact of foreign transnational corporations (TNCs) in the Brazilian economy. It also only marginally addresses the question of outward FDI by Brazilian TNCs.