Topic fdi outflow of brazil in the period of 2015 2021 suggestions to vietnam

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS INTERNATIONAL ECONOMICS INDIVIDUAL ASSIGNMENT OF INTERNATIONAL ECONOMICS TOPIC: FDI OUTFLOW OF BRAZIL IN THE PERIOD OF 20152021 & SUGGESTIONS TO VIETNAM Name Student ID Major Class Instructor Email : NGUYỄN HÀ MY : 11206183 : International Economics : International Business Administration 62C : Associate Professor Ph.D Nguyễn Thường Lạng : langnt@neu.edu.vn, langnguyen3300@gmail.com Mobile : 0983478486 Study time : Semester of the academic year 2022-2023 Student Mobile : 0982963692 Student Email : nguyenhamy6702@gmail.com HANOI, 8/2022 Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng GUARANTEE I hereby declare that I have completed this assignment entirely on my own To the best of my knowledge, the statements and materials used in the exercise are 100 percent accurate, have been cited, and are guaranteed to be precise to the highest degree If the assignment is not performed as specified above, I will accept full responsibility Hanoi, August 28, 2022 Prepare by Nguyễn Hà My THANK YOU First and foremost, I would like to express my sincere gratitude to all of the instructors at the National Economics University and, in particular, to the lecturers at the Institute of International Trade and Economics, who have diligently taught and connected with us valuable expertise and information I want to express my gratitude to Associate Professor Dr Nguyen Thuong Lang in particular since she helped me out in the exercise Working with you has allowed me to continue learning and gain a wealth of knowledge that will be very helpful to me in the future I have also developed a serious and productive work ethic, both of which will be essential for my career path Hanoi, August 28, 2022 Prepare by Nguyễn Hà My Student: Nguyễn Hà My Administration Class: International Business Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng TABLE OF CONTENTS OPENING Error! Bookmark not defined CHAPTER 1: OVERVIEW OF DIRECT Error! Bookmark not defined 1.1 POSITIONS AND TRANSACTIONS Error! Bookmark not defined 1.1.1 The total FDI position Error! Bookmark not defined 1.1.2 FDI net applications 1.1.3 Capital participations flows Error! Bookmark not defined 1.2 DECOMPOSITION OF EDI POSITION VARIATIONS 1.2.1 The variation in the FDI position 1.3 1.4 INVESTING REGIONS AND INVESTED SECTOR OF ECONOMICS ACTIVITY 1.4.1 Positions 1.4.2 Transactions 1.4.3 Profitability CHAPTER 2: TRADE RELATIONSHIP BETWEEN BRAZIL AND ARGENTINA 12 2.1 TRADE BETWEEN BRAZIL AND SOUTH AMERICA (2000 – 2021) 12 2.1.1 Brazil's intra-regional trade with South American countries Error! Bookmark not defined 2.1.2 Growth continued to return Error! Bookmark not defined 2.1.3 Argentina continues to be one of Brazil's main trading partners .Error! Bookmark not defined 2.2 TRADE BETWEEN BRAZIL AND ARGENTINA (2000 – 2020) Error! Bookmark not defined 2.2.1 Existing trade between Brazil and Argentina Error! Bookmark not defined 2.2.2 Trade between Brazil and Argentina has remained concentrated in five chapters .Error! Bookmark not defined 2.3 IMPACTS OF TEC REDUCTION Error! Bookmark not defined 2.4 MACROECONOMICS IMPACTS .Error! Bookmark not defined 2.3.1 Statistics on FDI Error! Bookmark not defined 2.3.2 Why should we invest abroad? .Error! Bookmark not defined 2.3.3 Most of Brazil's two investments in Argentina Error! Bookmark not defined CHAPTER 3: BNDES 18 3.1 OPENING 18 Student: Nguyễn Hà My Administration Class: International Business Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng 3.1.1 Definition Error! Bookmark not defined 3.1.2 About BNDES Error! Bookmark not defined CHAPTER 4: SUGGESTION TO VIETNAM 18 4.1 SIMILARITIES AND DIFFERENCES 18 4.2 COMMENT 18 CONCLUSION Error! Bookmark not defined LIST OF REFERENCES Error! Bookmark not defined APPENDIX 01 APPENDIX 02 APPENDIX 03: Student: Nguyễn Hà My Administration Class: International Business Bài tập học phần Kinh tế quốc tế Student: Nguyễn Hà My Administration GVHD: PGS TS Nguyễn Thường Lạng Class: International Business Chuyên đề thực tập GVHD: PGS TS Nguyễn Thường Lạng INTRODUCTION Inevitability of topic selection The Foreign Direct Investment in Brazil Report presents statistical analyses of the direct investment liabilities position in Brazil from 2010 to 2016 Direct investment is the most important external investment category for the Brazilian economy At the end of 2016, the direct investment liabilities position was approximately equivalent to half of the country’s total external liabilities Direct investment liabilities registered net inflows over the entire series and have been systematically less volatile than portfolio and other investment categories (loans and trade credits, among others) According to international methodological standards, a direct investment relationship occurs when an investor from one economy holds voting power of 10 percent or more in an enterprise of another economy.1 Under these conditions, the direct investor effectively participates on the decisions and the strategy of the business, maintaining a stable and long-term interest in the direct investment enterprise (enterprise that receives direct investment) Direct investment has two components: equity and debt instruments The equity component refers to nonresidents’2 ownership of shares of enterprises resident in Brazil; the debt instruments component comprises credit granted to enterprises resident in Brazil by nonresident enterprises belonging to the same economic group The major data source for the compilation of direct investment liabilities statistics presented in this report is the Census on Foreign Capital in Brazil (Census) As of 2010, the Quinquennial Census, performed for the years ending in zero or five, is censitary, and encompasses all enterprises resident in Brazil that have a nonresident investor owning part of its equity For the remaining years, an Annual Census collects data from a subset of these respondents, comprised of large corporations only Estimates for smaller enterprises that not participate in the Annual Census are made for the positions, for which there are complementary databases The estimation process is described in the methodological annexes For this reason, some direct investment liabilities statistics are presented only for 2010 and 2015 SV: Nguyễn Thị Lành Lớp: Kinh tế quốc tế 57B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng CHAPTER 1: OVERVIEW OF DIRECT - In 2019, the total FDI position increased by 8.9% compared to the previous year Net flows increased to US$22.8 billion 1.1 POSITIONS AND TRANSACTIONS 1.1.1 The total FDI position The total FDI position totaled US$416.6 billion in 2019, of which US$385.0 billion in equity participation and US$31.5 billion in intercompany operations The 2019 total position increased by US$34.0 billion compared to 2018 Like the PDI, the FDI position in 2019 is the highest value observed in the series, as illustrated in Figure 1.1.2 FDI net applications FDI net applications totaled US$22.8 billion in 2019, a significant increase from the US$2.0 billion observed in the previous year Figure 10 shows the recent evolution of FDI transactions accumulated in twelve months SV: Nguyễn Thị Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng - In 2019, capital participation flows, excluding reinvested earnings, totaled US$9.7 billion and once again contributed to increase total FDI, after generating net divestments of US$5.0 billion in 2018 Reinvested earnings exceeded US$2 billion in 2018 to US$11.1 billion in 2019 Net grants from intercompany operations contributed US$2.0 billion to 2019 FDI Figure 11 demonstrates the composition of FDI flows Decomposition of EDI position variations - As with the FDI position, the variation in the FDI position is explained by transactions, parities and prices, and other variations Figure 12 shows the decomposition of changes in FDI positions – Equity participation between 2017 and 2019 From 2017 to 2018, the FDI position decreased from US$358.4 billion to US$345.7 billion, or 3.5%, and all components contributed SV: Nguyễn Thị Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng to the setback From 2018 to 2019, the FDI – Equity Equity position increased to US$385.0 billion, or 11.4% While transactions recorded in the balance of payments reached US$20.8 billion, other changes in volume added up to US$18.9 billion 2.1.1, Investing Regions and invested Europe is the main investing region in the country; Caribbean and Europe are the main regions invested - According to the immediate investor criterion, Europe remains the region with the largest stock of PDI in Brazil in 2019, with 67.8% of the total of US$874.0 billion, as shown in Figure 20 There was a small increase compared to 66.1 % of the total of US$737.9 billion registered in the previous year North America is the region with the second largest stock of PDI, with 17.6% of the total SV: Nguyễn Thị Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng - As shown in Figure 21, the Netherlands stands out as the main immediate European investors, with 42.4%, followed by Luxembourg, 13.3%, and Spain, with 13.2% of the European total (US$593.3 billion) France, Switzerland and the United Kingdom are, in sequence, the other main European investor countries SV: Nguyễn Thị Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng As for IDP transactions – Intercompany operations in 2019, the coke, oil derivatives and biofuels, and agriculture and mineral extraction sectors stood out in both inflows and amortizations The vehicle sector showed significant inflows, while the financial services sector was an important contributor to gross amortizations Figure 31 depicts the transactions of intercompany operations by sector of economic activity Gross investments of FDI – Equity participation, excluding reinvested earnings, totaled US$14.2 billion in 2019 Companies in the financial services sector were the main destination of these flows, as shown in Figure 32 SV: Nguyễn Thị 10 Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng 4.3 Profitability The profitability of IDP – Equity Equity positions was quite different among the sectors of the economy in Brazil in 2018, as shown in Figure 33 The graph also shows significant differences in the behavior of profit between sectors In the period from 2010 to 2019, the beverage and financial services sectors showed positive results; trade, oil and gas extraction, metallurgy and telecommunications alternated profit and loss; and SV: Nguyễn Thị 11 Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng the vehicle sector went from profits, between 2010 and 2014, to losses as of 2015 CHAPTER TRADE RELATIONSHIP BETWEEN BRAZIL AND ARGENTINA 2.1 Trade between Brazil and South America (2000-2020) - Over the last few decades, Brazil's intra-regional trade with South American countries has - on the whole - shown a surplus Favorable for the Brazilian economy during the entire period analyzed (2003-2020) Brazil's cumulative trade balance with South The United States, over the past two decades, has totaled $148.68 billion, in nominal terms The peak of Brazil's exports to South America occurred in 2011, the year that Brazil had a positive balance of 45.16 billion USD in exchange with the region As of 2012, exchange flow SV: Nguyễn Thị 12 Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng Continuous trade with South American countries tends to decrease In 2020, South America's participation in Brazil's total exports is 10.8% (22.7 billion USD); Compared to total imports, it only reached 11.4% (equivalent to 18.2 billion USD) - Growth continued to return in the periods 2014-2016 and 2018-2020 A slight rebound is observed from 2017 to 2018, no less than relations with China or the rest of the world rest of the world - Argentina continues to be one of Brazil's main trading partners, as it reduces its share from 12% in 2000 to 4.5% in 2020 2, Trade between Brazil and Argentina (2000-2020) - Between 2010 and 2020, existing trade between Brazil and Argentina has fallen sharply In 2020, the current trade will receive 16.4 billion US dollars According to the analysis, Brazil's cumulative trade surplus with the neighboring country over two decades reached $47.9 billion USD - The same movement of emphasis signs still occurs with imports Brazil's imports originating from Argentina will decline from 12% to 5% between 2000 and 2020 During the same period, purchases of Argentine products from Brazil will decrease from 25.6% to 20.4% SV: Nguyễn Thị 13 Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng - In the last twenty years, according to the classification of the Harmonized System (SH2) When comparing the years 2000 and 2020, some important changes can be seen in the composition of Brazilian exports to Argentina, even though the sets of goods have remained around 55% of the total sold by Brazil over the period In general terms, the greater expansion of SH2 87 (vehicles and parts) and the retraction of SH2 84 (nuclear reactors, boilers, machinery, apparatus and mechanical instruments) and SH2 85 (machinery and electrical appliances), both both in nominal values and in relative terms The shares of SH2 39 (plastics) and SH2 48 (paper and cardboard) also increased SV: Nguyễn Thị 14 Lớp: Kinh tế quốc tế B Bài tập học phần Kinh tế quốc tế GVHD: PGS TS Nguyễn Thường Lạng - The automobile industry occupies a significant weight in Argentina and Brazil's exports to each other 3, Impacts of the TEC reduction - Recently, the Brazilian government defended a linear reduction of 20% in the tariffs applied by the bloc, with 10% at the end of 2021 and the other 10% in 2022 3.1, Macroeconomic impacts - Table shows the results of the three CET reduction scenarios on the main macroeconomic variables in Brazil and Argentina The results are positive for both countries, with an increase in GDP, investments, exports and imports, as well as a reduction in the general level of prices The results would be negative only in the countries' trade balance and terms of trade In the basic scenario, with a 20% reduction in the CET, the Brazilian GDP would grow 0.16%, more than the Argentine GDP growth (0.09%) Also in investments, exports and imports, Brazil's gains are greater than those of Argentina In terms of trade balance, the reduction would be much greater in Brazil, in absolute terms: US$ 3.9 billion against US$ 436 million in Argentina SV: Nguyễn Thị 15 Lớp: Kinh tế quốc tế B ... According to the immediate investor criterion, Europe remains the region with the largest stock of PDI in Brazil in 2019, with 67.8% of the total of US$874.0 billion, as shown in Figure 20 There... enterprise of another economy.1 Under these conditions, the direct investor effectively participates on the decisions and the strategy of the business, maintaining a stable and long-term interest in the. .. compared to the concept of final controller This is the case of the Netherlands and Luxembourg, host countries of intermediary companies, which act in the channeling of direct investment from final