The case of FDI for Brasil: one foreign observer's view

Abstract

My brief was to present a non-academic, ‘conversational’ report on how FDI may help Brazil accomplish sustainable and inclusive growth in the country. It is meant to be a pragmatic survey and synthesis of interviews and readings conducted during a short visit to Brazil in January 2018, rather than a work that seeks to test economic theories or policy dogma or break new ground. Nevertheless, I hope it benefits from a beginner’s proclivity to ignore borders, common assumptions, inherited knowledge, whilst equally, with a bit of luck, managing to form a plausible narrative. The result of this investigation is substantially more diffuse, and ultimately quite a bit more unwieldly than the original question of how to promote SDG 17’s goal of crowding- in more private investors (in our case, foreign ones). Indeed, my initial bias was along the lines of promoting FDI in Brazil by setting up a few representative offices, organising investor conferences, and promoting some targeted financial products. All that is necessary, but the sheer scale and consistency of FDI into Brazil over a quarter century and its failure to coincide with transformational, inclusive growth suggests that asking more basic questions is necessary. I found it necessary to ask why FDI seems to have disappointed, and what needs to be done to make it work for Brazil in the future. That led me, for better or worse, to tackle the larger question of why Brazil failed to experience a productivity transformation. For better because I learned much in the process, for worse as I am not particularly qualified for such an undertaking.