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Foreign Direct Investment

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Foreign direct investment is regarded as the significant concept because it plays vital role in the economic development and growth of the country. It is noticed that there is strong relationship between FDI and economic growth because increased amount of foreign investments are required to achieve sustainable position by the country in terms of economic growth. The aim of this paper is to evaluate the effect of foreign direct investment on Brazil. The hypothesis that is tested in the paper is as follows:
• H0: There is no effect of FDI on growth, employment, balance of trade and equality in Brazil
• H1: There is effect of FDI on growth, employment, balance of trade and equality in Brazil
For the purpose of evaluating this hypothesis, different …show more content…

While on the other hand, Biglaiser and DeRouen (2006) stated that FDI is the investment that is made by the foreign investor in the business of the country. This investment provides them control over the company purchased. However, the OECD illustrated this control as the holding 10% or more of the business. This is the reason that organisations, which focus on the use of FDI, are regarded as multinational organisations. It is noticed from the study of Buthe & Milner (2008) that the foreign direct investments (FDI) plays vital role in the industrialisation of Brazil, which has been attracted by government policies and large domestic market. This investment is mostly directed towards technology intensive industries and …show more content…

It is noticed that FDI forces investor to invest their resources to some other economy instead of the host country, therefore, it obstruct domestic investment. This means that due to FDI, the domestic investment declines due to which the national businesses have to suffer negatively. Moreover, __ argued that investment in foreign countries gives rise to the problem of high costs. It is noticed that investing in the foreign economy is more expensive in comparison to the goods that are exported. This means that it is important to prepare sufficient money in order to set up operations in the foreign

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