Open Conference Systems, 16th SGBED & XII ESPM International Conference in Management

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FOREIGN DIRECT INVESTMENT AFTER THE 2008 FINANCIAL CRISIS IN BRAZIL
Mauricio Fronzaglia, Álvaro Alves de Moura Junior, Joaquim Carlos Racy, Pedro Raffy Vartanian

Last modified: 2019-04-01

Abstract


This research has the objective of evaluating the impacts of the Brazilian public economic policies implemented in response to the 2008 crisis on foreign direct investment (FDI) inflows and outflows. According to United Nations Conference on Trade and Development (UNCTAD) data, the importance of research is justified by the following factors: 1) The worldwide flow of FDI since 2000 showed a growth trend that was interrupted for a short period between 2002 and 2003 and the financial crisis of 2008; 2) Brazil is one of the main welcoming countries of FDI and its participation in the global flow increased from 1.3% in 2006 to 4.4% in 2017; and 3) the participation of the group of developing countries in the reception of these capitals grew after 2008 and, since then, it has continued to increase. In order to achieve the objective of this research, a characterization of the economic policy as public policy will be made, firstly, by analyzing it according to the political sociology of public action approach in its three key elements: sector-global relationship, referential and dynamic interaction of actors. Subsequently, foreign direct investment will be described and defined along with its evolution (from the year 2000) and its importance to the Brazilian economy. Changes in public policies after the crisis will also be described. Finally, the impact of these policies on direct investment flows will be analyzed. The economic policies adopted in response to the 2008 crisis will be analyzed through the political sociology of public action. These actions will be interpreted through their relations with other areas of government (the sectoral−global relationship), their reference as public policy (the legal, institutional and cultural parameters that form the referential ) and the description of the actors and their interaction dynamics in the conception and implementation of the public policies considered here. In Brazil, there was a clear change in economic policy after the 2008 crisis, with effects on direct investment: the “Macroeconomic Tripod,” which consisted of the combination of primary surplus with the inflation targeting regime and floating exchange rate, was replaced by the so-called “New Economic Matrix," which was composed of an interpretation that there was a combination of real interest rate in high levels of the Brazilian economy combined with a valued exchange rate. In this scenario, the state should assume a more interventionist and protectionist role, not only reducing the real interest rate, but also expanding subsidized credit and devaluing the exchange rate, among other actions. This change has impacted both FDI flows and outflows, which will be duly identified through the application of the Grubel and Lloyd Index adapted, according to Grubel and Lloyd (1975), with input data from foreign investment (FDIin) and local investment in the foreign country (FDIout) obtained at UNCTAD.


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