As One Of The Bric Countries, Why Are Individuals And Companies Heavily Investing In Brazil In The Short Term And How Are They Benefiting? Research Paper

Background to the problem

The purpose of this research proposal is to presenting a coordination of changing dynamics of the global investment scenario along with the factors effecting the investor’s motivation to invest in the BRIC region like Brazil.

The investment consultants and business houses are most likely to use traditional approach of investment, but the global financial crisis and ongoing recessionary economy has driven the corporate and individual investors to identify safe investment portfolio where BRIC counties like Brazil has drawn central attention.

The banking and financial sector of Brazil has proven it’s solid base and resilience by encountering global financial crisis without any major shock, but the domestic economic challenges encompassing with reformation, liberalization and perfect competition among the players (BDSI, 2008).

On the other hand, Brazil including the BRIC countries has demonstrated their power in the international relation that empowered them to share multilateralism among the struggling breath of the great powers (Woods, 2010).

During the global financial crisis Brazil has demonstrated its economic power by offering to support to the IMF to reform Latin America and lent US$ 15 billion to overcome the crisis, As a result, Brazil including BRIC countries have gained competitive advantage to attract FDI inflow both in long and short-term.

Tan (2011) pointed out that traditional practice of the development finance flow has quickly shifted on post global financial years, before the crisis the global financial flows stimulated from the developed countries to the developing countries, but in recent years, the emerging economies of BRIC countries, remarkably BRIC and Brazil are demonstrating their trend to invest in other developing countries.

Brazil is evolving as foremost global investors through its BNDES¹ by ensuring its global role as an emerging actor in the global economy with tremendous scheme to acquire natural resources, enhancing open market, and powerful strategic political with BRIC, as a result investors of both individual and corporate level have considered it as a heavenly investment region.

Research Proposal

There is enough research with the standard and quality of the portfolio of investment in the global arena and there is also huge number of recent research with the necessary trend of FDI flow in the emerging economy, but the existing investment literature have not yet been addressed the prospect and dilemma of mainstream investment towards BRIC or Brazil.

There is no research agenda has not yet raised to what extent the BRIC and Brazil are capable to ensuring higher profitability and safety for the global corporate and individual investors complying with the standard developed county’s standard or to what extent Brazilian investment strategy is capable to attracting foreign investors.

There is also no elaborate study concerning the Brazilian political economy on post financial crisis and investment factors those are motivating investors for enhanced move to that country.

This research proposal has taken up this issue and aimed to coordinating deal with the results those provide most advantageous solution for investment environment acceptable to the value chain of investor and also acceptable to the academia and business communities in this region.

While the corporate and individual investors would be convinced, they will take appropriate step to make necessary changes of their investment strategy in Brazil including BRIC.

Addressing the research questions, it has also aimed to generalize the standard of factors those influences investors to ensure their attempt to move their short-term investment in Brazil, it also inspires the Brazilian authority to enhance their investment situation friendlier for foreigners.

Moreover, the proposed research would demonstrate the strength and weakness of the Brazilian economy, investor’s motivation towards the existing investment trends of the country. The proposed research also argues for optimal solutions for coordination with the objectives of short-term investment in Brazil complying with standards of global investment scenario.

Current impediments

• Confusing pattern of investment scenario within the business firms in Brazil,
• The existing approaches of investment portfolio and applicable value chain of the Brazilin investment consultants are not readily accessible for at a single perfection,
• The motivating factors of investors in the short-run business and investment perfection are not enough clear to the decision makers of the concerned agencies,
• Existing approaches of the business firms in within their investment approaches necessitates extensive ranging of data those are not easily obtainable,
• The reachable data may not be appropriate to a clear-cut factors distressing the business firms decision making based on the concurrent political economy of Brazil,
• Existing approaches of investment practice and value chain management of investors in business that demands clear understanding of the foreign investors;

Goals & Aspiration

• To produce well grace available to support to the investment integration and value chain of the trade and commerce in Brazil;
• To support the verdict of BRIC for any development of investment environment within the Brazilin territory that will attract elevating number of foreign investors to accelerate foreign exchange inflows in the country,
• To minimize efforts and reduce complexities of existing investment practice, which is essential to support the competitive advantage for Brazilin investment firms by which they would be interested to upgrade their investment model,
• To make use of such information, which is available among the existing investment opportunities and the value chain of the trade and commerce in the BRIC region,
• To carry out the best research outcomes that could be done rapidly with appropriate system by engaging the new scholars and academia concerned with investment in this region,
• To contribute with proper research outcomes to the Brazilian government that will assist to formulate their further investment policy of the country.

What is Not New

• The basic concepts of investment portfolio and value chain of the investment based BRIC region business and standard return on investment,
• The conceptual framework of investment portfolios analysis that has applied within this research;
• The investment practice and regulatory quality assessment process including management procedure in this region,
• Technological process of improvements for the investment implication for both stock exchange and business firms;
• The available public and private research data of most recent investment research with BRIC including Brazil and
• The progression simulation framework of investment trend in Brazil

What is New

• The framework that has been presented for this research proposal,
• The evaluation of factors that support the Brazilin business firms for quick enhancement of the existing investment practice towards the global standards;
• A structured set of recommendation that would be available to contribute in reconfiguring the existing business practice and their standards of investment integration in Brazil;
• A well thought-out set of coordination between the policy makers and investors of the Brazilian trade and commerce;

The proposed thesis would critically illustrate the perceptions and attitudes of the factors affecting the investor’s motivation to move to the Brazilin marketing complying with the global criteria when the policymakers of country are interested to elevating the same factors touching investor’s motivation and exploration to complying investment portfolio.

The proposed thesis would be well-organized with six chapters as:

• Problem Statement,
• Relevant Literature Review,
• Methodology
• Results & Findings,
• Discussion,
• Key Recommendation & Conclusion including their appropriate sub-chapters, there should be some other sections such as Acknowledgments, Abstract, and Appendix with appropriate coherence with the research of investment in Brazil.

Research question and objectives

The current research has expected to put together an appropriate investment mechanism for gaining effectiveness to demonstrate profitability in short run under for both the investors at home and abroad. To serve this purpose this research effort has engaged to answer the basic research question as- which investment factors are most influential for BRIC countries to gain competitive advantage by the investor.

The answer to this question will enable the investment managers of corporate bodies for implementing various forms of investment tools to differentiate Brazilian offerings far from the developed countries with the investor’s response.

In other words, the objectives of this research is to analyze current investment strategy used by BRIC and Brazil, examining its investors opinion and identifying the strengths and weaknesses of its investment strategy with the aim to make recommendations for short term investors.

• • To what extent is the theoretical framework of investment encouraged, the emerging political economy BRIC to attract global investment flow.
  • How the local legislation of Brazil would safeguard further improvement of investment environment comparing with global standard?
  • What are the strength and weakness of Brazilian economy that investors have to take into account?

Literature Review

The literature review of this dissertation will accentuate on a range of issues, which relate to the growing trends of the emerging economies like the Brazil, Russia, India, and China. Moreover, a thorough research will be conducted on the investment opportunities of the foreign multinational corporations and other individual investors on the lucrative markets of the BRIC nations.

In addition, some other issues will be brought into focus, which include the impact of WTO membership of Brazil and its consequences on international trade and foreign direct investment atmospheres. In order to carry out a vast research on the literature of the main dissertation, it would investigate the appropriate theories and principles set out by some of the renowned scholars on the topic area.

For example, according to the author Veiga (2004), foreign investments started to achieve value in Brazil from the end of nineteenth century, particularly during the investments of the United Kingdom in services; on the other hand, foreign investments in urban infrastructural services achieved potency in the first decade of the twentieth century, mainly provoked by increasing urbanization and industrialization attempts.

On the other hand, Sauvant (2005) mentioned that due to the governmental policy of law liberalization, the intensity of foreign investment in Brazil is growing in a fast rate; in addition, the existing policy for any foreign entry in the country focuses on the necessity of foreign direct investment for the potentiality of economic development.

Through this, the country expects economic development not only in terms of gross domestic product or per capita income, but also in terms of rising employment opportunities and better standards of living. According to Veiga (2004), FDI inflows in Brazil is wonderful because this is increasing rapidly for implementation of flexible legislation, low tariff rates for most of the products, and limited competition to enter into this market.

MortAimore (2000) and KPMG (2009) stated that although it has been evidenced that traditionally the country emphasized to keep control over the foreign companies, now, the local system encourages the foreign companies with favorable investment environment by providing energy and infrastructural support together with low tariff and duty free access to the markets.

Conversely, Tozzini, Freire, & Advogados (2002) has pointed out that at the same time, the government also established free trade zones in some areas of Brazil, where the foreign companies are entitled to lucrative controlling power and thus the free trade zones have turned as an effective attraction for foreign investment in Brazil.

Research Methodology

Research methodology will be the third chapter of the main dissertation, which will discuss the research process or give methodological framework in order to describe or investigate why individuals are and companies heavily investing in Brazil in the short-term and how are they benefiting.

However, this chapter will not only discuss the research topic, but also provide justification to use particular method; for instance, it will mention the reasons and state that it will use six major steps of Malhotra and research approach of Sekaran (2006), Zikmund (2006) and Cohen, Manion & Morrison (2007) to formulate the paper.

Research Design

Malhotra (2009, p.75) mentioned that there are many ways to perform research, however, Saunders, Thornhill & Lewis (2006) stated that researchers should take into account a number of issues like prior investigation on the topic area, and extension of the problems.

Malhotra (2009, p.75-79) further classified research design and analyzed the difference between different research approach; however, the following table provide more details regarding this issue –

Table 1: Differences between exploratory and conclusive research

However, the researcher will consider descriptive research approach considering the above-mentioned facts; in addition, there are many prior study about the topic related with the investment opportunities in Brazil and the interest of investors or find out the factors that motivated investors.

Quantitative and Qualitative Research Approach

This is one of the most important factors to formulate the main dissertation, as the outcomes from the last three chapters will be dependent on the research approach; however, most of the writers like Malhotra, Sekaran and Zikmund give concentration mainly on two kinds of research approaches. There are –

• Qualitative research approach: Both methods have strengths and weaknesses, but this method is significant while the researcher considers exploratory research instead of descriptive research;
• Quantitative research approach: On the other hand, this method helps the researcher to quality data and describe the result as well;

However, the researcher will use quantitative research approach, as the questionnaire will design to quantify primary data.

Primary data and secondary data

The main dissertation will use both primary and secondary data, while primary data will help the researcher to know the view of companies and individuals that why they would like to invest in Brazil and how they become benefited; however, secondary data will justify the feedback of the target respondents.

Interviews

According to the scholars, personal interview is the most effective way to gather primary data; therefore, the researcher is interested to use this method though it will take a long-time and large budget along with foreign companies and individuals many not help on time and so on.

Sample Size

In order to collect data for dissertation, the researcher will contact with the employees of 20 foreign companies and more than 100 individuals who are interested to start business in the BRIC countries particularly in Brazil considering benefits to invest.

Table 1: Selected groups

Timescale and resources

Following table gives more detail about deadline –

Reference List

BDSI (2008) Brazil: The Best Investment in the BRIC Countries? Web.

Cohen, L., Manion, L. & Morrison, K. (2007) Research Methods in Education. 6^th ed. New York: Routledge.

KPMG (2009) Think BRIC! Web.

Malhotra, N. K. (2009) Marketing Research- An Applied Orientation. 5^th ed. Prentice-Hall of India Private Limited.

MortAimore, M. (2000) Corporate strategies for FDI in the context of Latin America’s New Economic Model. World Development, 28(9).

Saunders, M., Thornhill, A. & Lewis., P. (2006) Research Methods for Business Students. 4^th ed. London: FT Prentice Hall.

Sauvant, K. P. (2005) New Sources of FDI: The BRICs Outward FDI from Brazil, Russia, India and China. Web.

Sekaran, U. (2006) Research Method for Business. 4^th ed. London: John Wiley & Sons, Inc.

Tan, X. (2011) Emerging Actors in Development Finance: A Closer Look at Chinese and Brazilian Overseas Investments. Web.

Tozzini, Freire, & Advogados, T. S. (2002) Foreign Investment in Brazil. Web.

Veiga, P. D. M. (2004) Foreign Direct Investment in Brazil: regulation, flows and contribution to development. Web.

Woods, N. (2010) Global Governance after the Financial Crisis: A New Multilateralism or the Last Gasp of the Great Powers? Web.

Zikmund, W. M. (2006) Business Research Methods. 7^th ed. Orlando: Harcourt Publishers.

Footnotes

• ¹ Brazilian Development Bank