Ofdi Promotion Policies in Emerging Economies: The Brazilian and Chinese Strategies

Friday, 3 July 2015: 2:15 PM-3:45 PM
CLM.B.05 (Clement House)
Luiz Caseiro, University of São Paulo, São Paulo, Brazil; Brazilian National Institute for Educational Research, Brasilia, Brazil
Gilmar Masiero, University of São Paulo, São Paulo, Brazil
This paper analyzes how the Brazilian and Chinese outward foreign direct investment (OFDI) policies can contribute to the economic development of their home countries. The aforementioned objective is achieved through a comparative analysis of the Brazilian and Chinese OFDI policies within a new theoretical framework for examining the developmental implications of OFDI. Both primary and secondary data are utilized to compare Brazilian and Chinese strategies. We conclude that Brazil and China have shifted from a development strategy centered on internal market self-sufficiency to one that seeks international economic prominence by, among other strategies, adopting OFDI support as a part of their industrial policy agenda. However, while the Chinese government has focused on cross-national acquisitions of assets that are scarce within the country, the Brazilian government has preferred to support industries that are already highly competitive internationally, mostly activities intensive in natural resources that are abundant domestically. The Chinese strategy has a greater potential to generate positive spillovers to domestic economy. This paper ends with recommendations on how Brazil, in particular, and emerging economies, in general, may improve their OFDI policies. The contribution of this paper to the existent literature relies both on its approach and on its theoretical framework. Differing from the majority of the studies on the internationalization of companies from emerging economies, this paper emphasizes the importance of industrial policies to support OFDI and the developmental dimension of these policies. We believe that the theoretical framework developed here can be extended to further analysis of OFDI policies from other emerging economies. Policymakers may also benefit from the conclusions of this research.