Abstract
The history of foreign direct investment (FDI) inflows in Brazil and China was briefly reviewed. We examinefrom a contemporary policy perspective, trends and patterns, sector distribution, and productivity and growth inboth countries. The comparative study of FDI in Brazil and China from the historical and contemporaryperspective examines the importance of foreign capital in each stage of development in terms of various aspectswe have proposed. This study also provides an understanding of FDI in both countries on the policy grounds. Asfar as growth and productivity is concerned. FDI has contributed to the economic development in both Braziland China. However, the impact on the growth is only partial and will rely on other factors as well.
Highlights
Foreign direct investment (FDI), by definition from International Monetary Fund (IMF), is “cross border investment where a resident in one economy has control or a significant degree of influence on the management of an enterprise resident in another economy.” FDI has grown dramatically, exceeding the growth of world production and the growth of international trade (Dierk, Stephan & Felicitas, 2008)
Many countries try to attract FDI because they believe that the presence of FDI will benefit domestic firms (Lin, Liu & Zhang, 2009; Blalock & Gertler, 2008) and FDI can be an important source of technology for developing economies (Blalock & Gertler, 2009)
GDP growth GNI per capita, PPP FDI, net inflows (% of GDP) Industrial, value added (% of GDP) Manufacturing, value added (% of GDP) Service, value added (% of GDP) Source: The World Bank Group. This comparative study of FDI in Brazil and China from the historical and contemporary perspective examines the importance of foreign capital in each stage of development in terms of various aspects we have proposed
Summary
Foreign direct investment (FDI), by definition from International Monetary Fund (IMF), is “cross border investment where a resident in one economy has control or a significant degree of influence on the management of an enterprise resident in another economy.” FDI has grown dramatically, exceeding the growth of world production and the growth of international trade (Dierk, Stephan & Felicitas, 2008). The report of World Economic Forum Global Agenda Council on Global Trade FDI (2013) pointed that FDI is a powerful instrument for growth and development, its relevance is enhanced today by its role as the crucial engine of trade, via global value chains, and by the critical need to increase investment flows to boost the global economy, create jobs, and promote knowledge and productivity enhancements. Both identified as top emerging market countries, Brazil and China experienced significantly different FDI policies from a historical perspective. As China has only opened up the economic policies since 1979, we shall skip the import substituting industrialization (ISI) stage and move on to the neo-liberalism era. We will visit a special agricultural sector in both countries
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