Foreign direct investment (FDI) outflows from Brazil are expected to be a record US$9.5 billion in 2004, UNCTAD is predicting. Since the 1990s, those outflows have been rising in spurts, with heavy fluctuations in recent years. Brazil was the most important source country for FDI from the Latin American region in 2002, with outflows of US$2.5 billion. Outflows fell sharply in 2003, reflecting the overall poor FDI performance of the region. In 2004, however, they rebounded sharply, placing Brazil among the top five outward investors in the developing world.
Brazil´s outward FDI stock - roughly equivalent to cumulative FDI flows - is likely to reach US$66 billion in 2004, according to UNCTAD projections. In 2003 it was the largest outward stock held by any country in the region, and the fourth largest in the developing world (after Hong Kong, China; Singapore; and Taiwan Province of China).
Most of the country´s FDI stock is located in tax-haven economies, suggesting that financial motivations have played a major role in its outward FDI. It is possible that a good part of these investments is being redirected to other countries. Other Latin American countries, as well as the United States, are the most prominent locations of Brazil´s outward FDI.
"It is time for Brazilian businessmen to abandon their fear of becoming multinational businessmen", urged President Luiz Inacio Lula da Silva last year. Luiz Fernando Furlan, Trade and Industry Development Minister, added that "the Brazilian Government expects the country to have 10 really transnational companies by the end of President Lula´s term of office".
Indeed, "while Brazil has succeeded in attracting sizeable amounts of FDI in the past, it´s only now that investment abroad by Brazilian TNCs appears poised to take off", says Karl P. Sauvant, Director of UNCTAD´s Investment Division.
