The Role of Foreign Direct Investments in the Development of Brazil and India: A Comparative Analysis

Abstract

Summary In this paper we concentrate on FDI and argue that the contrasting FDI policies in Brazil and India can be traced back to differences in the respective colonial (or semi‐colonial) experiences of the two nations during the 19th century. Our comparative analysis of FDI in Brazil and India shows the importance of historical and institutional awareness in gaining an understanding of the manner in which each society perceived the role of foreign investments in their societies. By doing this, we gain an understanding of the reasons these countries adopted different attitudes and policies towards foreign capital.

Multi-level Determinants of Inward FDI Ownership

“…For example, while post-colonial Brazil welcomed and encouraged FDI to play an important role in its industrialisation and development, a newly independent India restricted entry of foreign capital and preferred to look inwards, rather than looking towards FDI related growth and development policies, due to the differences in the colonial institutions of the two countries. (Baer and Sirohi 2013). The impact of the quality of institutions on MNE decisions seems arguably simple and quite straight forward, but there is no clear consensus on how much and how relevant institutional quality actually impedes FDI inflows.…”

Uma proposta de arcabouço teórico para análise do comportamento dos investimentos diretos estrangeiros em economias emergentes

“…Dentre os benefícios, pode-se destacar o aumento de competitividade das firmas locais, transferência de conhecimento, transferência de tecnologia, network com fornecedores e operadores logísticos a nível mundial, acesso à mão de obra qualificada, acesso à mão de obra barata, acesso a mercados financeiros globais, entre outros (Apergis, 2009;Baer & Sirohi, 2013;Chen, Hsu & Wang, 2012;Chow, 2012;Davies, 2013;Globerman, 2012;Herzer, 2010;Ketkar, 2014;Kahanidra, 2013;Lee, 2010;Quer et al, 2011;Qiang, 2013;Radlo & Sass, 2012;Rasiah et al, 2010).…”

Can foreign direct investment contribute to sustainable development? The role of Brazilian organisations involved in investment promotion (2002-2016)

“…A relevant share of the FDI entering Brazil does so to access its domestic market (Egan, 2015;Sabbatini, 2008;Sarti & Laplane, 2002). As a matter of fact, a significant part of foreign investments which have been directed to Brazil from the 1990s originated from the services sector (notably during the period in which a series of public enterprises were privatised) (Alencar & Strachman, 2016;Amal, 2016;Baer & Sirohi, 2013;Coelho, Fernandes, & Sampaio, 2008; Confederação Nacional da Indústria, 2014; M. R. B. Costa, 2008; Economic Commission for Latin America and the Caribbean, 2005; Instituto de Estudos para o Desenvolvimento Industrial, 2003;M.…”

“…One notorious fact observed by researchers studying the profile of FDI into Brazil is the relative scarcity of cases in which multinational companies investing in the country did so to carry out research and development (R&D) activities (Baer & Sirohi, 2013;Egan, 2015;Celio Hiratuka, 2008;Moura Junior, 2010;Rodriguez-Pose & Arbix, 2000).…”

“…In addition to the adoption of adequate measures in relation to the foreign investment policy itself, another important factor for the maximisation of benefits from inward FDI by a host location is the integration of the investment policy with broader actions to promote development. Countries which succeeded in promoting development with the support of FDI adopted an active policy which combined investment attraction with the creation of locational advantages through, for example, investments in education and infrastructure, incentives to R&D activities, stimuli to investments in sectors considered to be strategic (including those with greater potential of linkages with the local economy) and adoption of policies to improve the business climate (Baer & Sirohi, 2013;Carminati & Fernandes, 2013;Celio Hiratuka, 2008;Jorge, 2008). Unfortunately, such cases are rare.…”