Open AccessDoes foreign direct investment cause higher levels of productivity or do higher levels of productivity attract foreign direct investment? A study in transforming brazilian industry
Author(s) -
Nádia Campos Pereira,
Cristina Lélis Leal Calegário,
Ricardo Pereira Reis
Publication year - 2013
Publication title -
revista de ciências da administração
Language(s) - English
Resource type - Journals
eISSN - 2175-8077
pISSN - 1516-3865
DOI - 10.5007/2175-8077.2013v15n35p82
Subject(s) - foreign direct investment , productivity , business , order (exchange) , investment (military) , monetary economics , granger causality , industrial organization , international economics , international trade , economics , finance , macroeconomics , politics , political science , law , econometrics
With this research, it was aimed to investigate the factors that determine the investment decision of foreign investors in the Brazilian industry. Evidence shows that foreign investors are attracted not only by more productive and best performing sectors, but depending on the adopted strategy, they may choose investment projects in sectors that have lower performance levels which offer the potential for growth and the and improvement of efficiency levels and capacity. Granger causality test indicated that not only foreign investment gives more productivity gains, but also this productivity induces more foreign investment inputs. Foreign investors are also attracted by those sectors, which use their assets in an inefficient way in order to generate profits. These sectors may be attractive to foreign investors that want to invest in a more aggressive growth policy in order to get advantages on the availability of inefficiently used assets. These sectors may be also attractive targets to investors who seek to compete directly in relatively less competitive sectors.