Foreign Direct Investment in BRIC Countries: Historical Overview

Foreign Direct Investment (FDI) is an important source for the development of strategic sectors of the BRIC countries. In Brazil, since the late 19th century, FDI became more and more important. After the II World War, FDI played a key role during the Brazilian industrialization process. Much of the Brazilian history shows that the country has relied upon foreign capital to finance its development and economic growth. In recent years, foreign investments inflows are attracted by the large Brazilian market and the rapid economic growth of the country, besides the fact that Brazil will host the 2014 World Cup and 2016 Olympics.

In Russia until the 1990s, the amount of FDI flowing into Russia remained relatively flat. At the opening of this new millennium, Russia emerges as a country of opportunities for FDI. In fact, FDI inflows has increased over the last years in Russia thanks to its tremendous natural resources and growing domestic market. Russia’s new status as WTO member will also complement its internal economic reforms and improve foreign investment climate towards transparency and predictability in business transactions in the country.

During the course of the 1990s, the Government of India initiated economic and financial reforms aimed to progressively integrate Indian economy with the global economy. FDI is recognized by the Indian Government as an important driver of economic growth and development. As a result of the various policy initiatives taken, India has rapidly changed from a restrictive regime for foreign investments to a more liberal one.

Last but not at all at least, China has shifted from a closed, state-planned economy to an increasingly open and internationally integrated marketplace, over the past three decades. During the 1980s, FDI inflows grew steadily but remained relatively low mainly confined to joint ventures with Chinese state-owned enterprises. In the mid-1990, FDI became quite important for the Chinese economy and new rules and regulations have been issued accordingly. When China became member of the WTO in 2001, many new laws and regulations have been issued after. FDIs in China have benefited from this liberalization trend, specially the distribution, logistics, financial services and telecommunications sectors. Given China’s projection on the global arena, this movement is only expected to increase in the near future, as China continues to establish its position as one of the world’s foremost economic growing power Nation.

FDI in BRIC countries still remains bureaucratic and complex; however every BRIC country shows the same serious intent to make the investment climate more and more favourable in the near future.