The Ewaider, an international network of consulting, audit and accounting, represented in Brazil by Ewaider Moreira, has released a new study on foreign direct investment (FDI), which points out that Brazil, the Americas, was behind the US only in absolute numbers, in their ability to attract foreign direct investment over the past five years, since the credit crunch.
The study analyzed the FDI inflow in the last five years in 33 major economies around the world, measuring the causes of the success of countries in attracting international investment. The intention was to show that regardless of the size of GDP, countries are able to attract such investments in exchange for tax incentives and more favorable to entrepreneurship legislation.
The data with the absolute figures were obtained from the UNCTAD (United Nations Conference on Trade and Development) and central banks, through the member firms of Ewaider network. By studying the causes of the influx volume, it was possible to make a comparison.
The Foreign Direct Investment funding provides a major boost to national economies, creating new jobs and tax revenue in the short term and in the long term, improving productivity by helping to finance capital investment and making the most competitive national companies.
During the period under review, Brazil jumped from 13th place in 2008 to 4th position in 2012, among the countries that attracted foreign direct investment, even with the growth retracted. In total these last five years achieved an influx of U $$ 251 billion, equivalent to 11.2% of GDP, ranking 9th overall position; whereas the BRIC countries have attracted on average 10% of their respective GDPs.
The study shows that Brazil has attracted high levels of international investment, driven especially by the influx of large amounts of dollars arising from the auctions carried out by the Government, which boosted the Brazilian climbing short-term rankings, but being a situation easily modified in the long run .
According to the International Director of Outsourcing and Consulting of Ewaider Moreira, Eric Waidergorn, “this is not a very realistic scenario for Brazil, as the trigger for us to reach this position in the ranking was due to auction, and this form of investment tends to wane as They go by the events and the government’s interest in this capital inflow methodology. ”
He said it was important to note that there are issues of fundamental interest of investors to trust the economic sustainability of the country as the economic and industrial slowdown; economic uncertainty, given the recent “creative accounting”; an extremely complex and costly taxation system; judicial delays; sharp red tape to establish a company; cost of labor, given the social paternalism; and the high logistic costs due to the scrapping of the road and lack of railways.
The executive reinforces that if Brazil does not immediately adopt a restructuring of the points discussed above, is bound to leave the great destination of investments or condition will remain hostage to the position of the auctions to attract them. “An output in the short term, would be more pronounced in the form of tax incentives for foreign investors and bureaucracy of entrepreneurship, as well made by Belgium”.
Importantly the study is the position occupied by Belgium, which has attracted FDI equivalent to 91.4% net of GDP over the last five years, totaling more than US $$ 442 billion. In terms of absolute amount of FDI received, the country is second only to the United States, which received more than U $$ 1 trillion, and China, with U $$ 563 billion.
Belgium, despite having a GDP much lower than other countries in the European Union itself since the mid-80s created the law of “coordination centers”, which provided various tax incentives to attract multinationals to establish themselves in the country. What It resulted in 20% of the 100 largest multinationals in the world in that area.
Other factors behind Belgium were its prime geographic location and especially the high cool predictability, tax and bureaucratic, which transmits confidence to investors and reduces operating costs, fostering an environment for the development and sustainability of the business.
“This shows that GDP size has little to do with the FDI inflow. The most important are the tax benefits, logistics infrastructure and legal predictability, “adds Waidergorn.
China, from its stable growth and economic predictability, has guaranteed its reliability with investors to become one of the largest FDI destinations and currently second only to the US in absolute numbers.
The study also shows that, of the seven largest economies, only the US and UK are among the 10 largest inflows over the past five years. While Italy and Japan have the worst results in this period, occupying only the 29th and 42nd positions respectively, attracting the equivalent of 3.1% and 0.6% of their GDP over the period. Both are challenging environments for foreign investors to acquire assets.
According to the study of Ewaider, the processes for setting up a business in these countries are complex, which can prevent certain types of foreign investment.
Over the past five years, the US and China, 1st and 2nd placed, attracted the highest amount of FDI in absolute terms, although it represents, in general, a smaller share of their economies.
(Translated by Google)