FDI in Brazil

Overview by Globlatrade.net:

FDI in Figures

Brazil is world’s number one destination of FDI flows in Latin America. After breaking its FDI record in 2008, the influx slowed down in 2009 due to the global economic crisis but it has resumed growth since. Brazil has become the 4th international investor among emerging countires and the 1st in Latin America. This country's appeal to international investors is due to different factors:
- A market of almost 200 million inhabitants;
- A booming economy;
- Easy access to raw materials; and
- A diversified economy, therefore one less vulnerable to global crises.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 34,58545,05825,949
FDI Stock (million USD) 309,668287,697400,808
Performance Index*, Ranking on 141 Economies 1019087
Potential Index**, Ranking on 141 Economies 7167-
Number of Greenfield Investments*** 154250271
FDI Inwards (in % of GFCF****) 14.514.741.5
FDI Stock (in % of GDP) 22.717.625.5

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2009, in %
Netherlands 17.1
United States 16.5
Spain 8.7
Luxembourg 8.6
Japan 5.8
France 5.7
Germany 4.9
Cayman Islands 3.9
Bermuda 2.7
United Kingdom 2.5
Main Invested Sectors 2009, in %
Industry 46.1
Services 39.2
Agricultural sector 14.7

Source: Brazilian Investment Information Network

Form of Company Preferred By Foreign Investors
Very large companies, mergers and international acquisitions. The sociedades anonimas are the legal form of company preferred by foreigners.
Form of Establishment Preferred By Foreign Investors
Main Foreign Companies
Renault, Peugeot, Carrefour, Casino, Mc Donalds, Zara, General Motors.
Sources of Statistics
Central Bank of Brazil

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Why You Should Choose to Invest in Brazil

Strong Points
Brazil has Universities that perform just as well as their counterparts in the OECD and a very big manpower reserve educated to all levels.  It also has extensive raw material resources. A number of sectors offer good business opportunities. The Brazilian economy is diversified and more and more manufactured goods are produced and exported. The potential of the Brazilian domestic market as well as the low cost of labor are elements which may attract foreign investors.
Weak Points
Despite being open to world trade, several administrative barriers cripple international trade. Valuing the real against the dollar automatically reduces the country's competitiveness against Asian competitors in some sectors. The Labor laws are very onerous, involving substantial costs to foreign companies and keeping a good part of the local business in the informal sector.
Government Measures to Motivate or Restrict FDI
The Brazilian government encourages and promotes FDI. Most of the barriers to foreign investor activity have been removed particularly on the stock market. A very large number of public companies have been privatized and many sectors deregulated over the last fifteen years.

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