Following the money: Brazil and Vietnam
Thursday, May 13, 2004 at 3:29AM "Brazil: An underpowered economy (Lula's government is trying to remove obstacles to investmentóbut not fast enough)," The Economist, 8 May, p. 35.
"Vietnam's economy: The good pupil (Vietnam has become one of the fastest-growing countries in Asia)," The Economist, 8 May, p. 39.
Two articles preaching the same point: synchronize your internal rule sets to that of the emerging global rule sets and foreign direct investment will come your way. Vietnam is doing this, and by ramping up its intake of FDI it is the fastest growing economy in Asia after FDI-magnet China. Meanwhile, Brazil is languishing in growth because left-leaning Lula isnít moving fast enough to attract the FDI needed to keep building up the nationís energy infrastructure. In 2001, $20B was invested in energy infrastructure throughout Brazil, with two-thirds being private-sector derived and half of that (or one-third of total investment) being FDI.
This is a common story for emerging markets: deny yourself access to FDI and you might as well take one-third or more off the top of any investment plans you may be dreaming of in the years ahead.
This is why FDI is one of my key four flows that define globalizationís advance (Chapter 4: The Core and the Gap).
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