Many empirical works have revealed the resultant effect of Foreign Direct Investment (FDI) to the country's exports and other economic performance indicators. This article discusses the Brazilian strategy towards FDI and the indication of profit remittance with significant adverse movement in the long-run, which effects the FDI attraction policies for the country's economy.
History shows that Foreign Direct Investment (FDI)in Brazil has a sound record. From the beginning of the Second World War, the country has been the largest recipient of FDI in Latin America, as well as the largest source of FDI in the entire region. Earlier in 1990s, the FDI inflows to Brazil showed a greater tendency to diversify in terms of countries of origin and the sectors targeted by such investments. In the same period, some nationally-owned companies broadened their investments overseas too. Brazil was the largest host country and the home nation for FDI among developing countries till the 1980s debt crisis, when the country practically disappeared from the investors' map for over a decade or so. However, it made a spectacular turnaround that brought the FDI inflows back into the scene, with inflows reaching around $32.8 bn in the year 2000, $22.6 bn in 2001, an estimated $20 bn in 2002, and it reached $29.9 bn in 2003. Later, government restrictions encouraged the foreign investors to lift up the organized sectors such as petroleum, mining, telecommunications, internal transport, power generation, and insurance. Also, credit disbursements to Brazil were used to be larger than FDI inflows in a proportion of 3:1, up to 1995, but this entire scenario changed and currently FDI inflows have moved nearer to the value of total credit disbursements. Thus, FDI has virtually become very popular source of investment in the country. |
