After a slowdown in 2009, foreign direct investment (FDI) into Brazil has been booming. After having reached USD 65 billion in 2012, FDI inflows in Brazil increased to USD 64 billion in 2013, largely compensating for the deficit in the current accounts. Even though FDI influx is going through a slight decline since 2011, Brazil remains the largest recipient of FDI in Latin America and the fourth one in the world. Currently, the country is the fourth largest investor in emerging markets and the first in Latin America.
The attractiveness of Brazil for international investors is due to several factors:
- A domestic market of nearly 200 million inhabitants;
- A booming economy;
- Easy access to raw materials;
- A diversified economy, therefore less vulnerable to international crises;
- A strategic position allowing easy access to other South-American countries.
Among the factors hindering FDI are heavy and complicated tax systems, slow bureaucracy and cumbersome and rigid labor legislation. Brazil ranks 116 out of 189 countries in the classification of Doing Business 2014 issued by the World Bank.
The main investors in Brazil are the United States, Spain and Belgium. The sectors attracting most of the foreign investments are finance, the beverage industry, oil and gas and telecommunications.
|Brazil||Latin America & Caribbean||United States||Germany|
|Index of Transaction Transparency*||6.0||4.0||7.0||5.0|
|Index of Manager’s Responsibility**||7.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||5.3||5.0||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||66,660||65,272||64,045|
|FDI Stock (million USD)||696,507||745,089||724,644|
|Performance Index*, Ranking on 181 Economies||34||-||-|
|Potential Index**, Ranking on 177 Economies||25||-||-|
|Number of Greenfield Investments***||515||459||359|
|FDI Inwards (in % of GFCF****)||14.0||16.0||15.7|
|FDI Stock (in % of GDP)||28.1||33.1||32.3|
Source: UNCTAD - Last Available Data.
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.
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Last Updates: February 2015