Abstract

The objective of this article is to analyse the factors that determine the inflow of foreign direct investment (FDI) in Brazil after 1995, a period in which there was monetary stabilisation. The study includes analysing the theoretical aspects of this investment and investigating the empirical aspects of the Brazilian reality of FDI. Applying an econometrical model to statistically analyse the possible determinants of FDI in Brazil is one the specific objectives of this study. Compared to the others, the difference of this study lies in the focus given to the macroeconomic variables of the economy in relation to the inflow of FDI. It also studies the possibility of using the vector error correction (VEC) model, which allows a greater number of observations and better adjustments of the model. The study finds that gross domestic product (GDP), country risk, and FDI inflows themselves appear to have a more significant impact on new inflows of FDI.

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