INFLUENCE OF DIRECT FOREIGN INVESTMENTS ON THE ECONOMIC DEVELOPMENT OF DEVELOPING COUNTRIES (FROM THE CASE OF BRAZIL)

Abstract

Foreign direct investments (FDI) play an important role in the economic development of countries due to the intensification of capital formation processes, the transfer of technology and scientific knowledge as well as increasing labor productivity and social standards. The important role of FDI as a catalyst for economic growth is confirmed by the experience of a number of countries that have recently demonstrated the high positive dynamics of their economic indicators and the significant structural transformation of their economies in the modern way. The most striking example is China, India, Brazil, Mexico, Singapore, Taiwan, and South Korea. Studying and using foreign experience on the FDI impact on the development of the economies of recipient countries can be very valuable for Ukraine. The main goal of the author is to determine the impact of FDI on the economic development of Brazil. To establish the relationship between FDI inflows and economic development, the following were determined: a) the role of FDI in the formation of gross national product, the impact of FDI on economic growth in the country; b) the role of FDI in the formation of modern production and trade of the country; c) the role of FDI in job creation and human capital development; d) the role of FDI in the development of technical and technological progress in the country. The analysis of the movement of FDI into Brazil shows the coincidence of the sectoral composition of FDI investment and the country's current export composition. This confirms the conclusion that many decades ago, thanks to FDI, the foundations of Brazil's modern competitive industries were laid, which now form the basis of its exports. Thanks to the policy of the Brazil government, FDI was actively directed (through the system of "incentives to foreign investors in exchange for stringent requirements for them") in the development of the country's manufacturing industry, primarily metalworking, mechanical engineering, and the production of chemical products. As a result, we note that potentially FDI can have a significant positive effect on accelerating economic growth and making a real contribution to the economy of the recipient country. It depends on many factors, including the level of economic development of the country, the ability of TNCs to organize a highly profitable enterprise, investment climate, and the like.