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Evolution Of FDI

 

Professionals, merchants and bankers had to find a way to exchange their goods. The progress of the transport and the communication systems helped to this way. For this reason the network of direct investments across countries increased and new entrepreneurs appeared in a wide range of countries. .
             The area of interest was wide, covering different fields of business. To illustrate, the gold of Brazil became an object of exploitation from the west cultures, especially from the British Industry. As a result, Brazil was ranked into the fourth largest producer of gold in the world. In the 1950s, Brazil started promoting import substitution industrialization FDI, which continued to be implemented throughout the 1950s and the 1960s. In this closed economy, imports were discouraged and as a result of the economic policies, exports were also low. Foreign investment in infrastructure declined. Some incentives were offered for foreign investment in the manufacturing sector, because the governments at the time believed that FDI could only be promoted at a quick pace with the use of foreign capital and technological know-how . By 1980, there was practically no foreign investment in public utilities, while 68% of total foreign investments were concentrated in the manufacturing sector .
             In the 1970s, the focus of government economic policies shifted towards encouraging a diversification of exports. These policies were reversed gradually throughout the first half of the 1980s. The first response to the debt crisis was to stiffen the restrictions on imports. Towards the end of the 1980s however, it became ever clearer that this model was not viable anymore. Starting in 1988, the economy opened gradually. In 1990, the process was accelerated with the announcement of a new industrial and trade policy, where the opening of the economy would be the primary focus .
             Those economic policies resulted in a trendless, but generally high inflow of foreign direct investment.


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