Brazilian-American Capital and Investment Exchange Analysis
4
EXECUTIVE
SUMMARY
T
he United States has historically been an important trade
and business partner to Brazil. According to figures from
the U.S. Treasury, Brazil is the Southern Hemisphere
country with which the United States has the largest trade
surplus. On the Brazilian side, the USA is its second largest export
market and is invariably its biggest or second biggest source of
imports. Bilateral trade flows between the two countries grew
by 74% between 2009 and 2014, to US$62 billion, accounting
for around 15% of Brazil's total trade flows in 2014.
In the field of investments, Brazil's relationship with the
American market is also very important. Between 2007
and 2012, total assets owned by Brazilian companies in the
United States expanded by 221%, reaching US$93.6 billion
in the most recent year analyzed. From the perspective of
employment generation, Brazilian assets generate practically
twice as many jobs on average as other countries, given
that the capital invested by Brazil in the United States tends
to be more labor intensive than that of the other countries
investing in the U.S. market.
There has also been significant growth in flows of Brazilian
foreign direct investment (FDI) into the United States, from a
deficit of US$282 million in the three-year period 2001-2003 to
a surplus of around US$5.8 billion in 2010-2012. These sums
exceeded investment flows into the USA from other emerging
economies such as Mexico, China, India, Turkey and South
Africa in the period analyzed.
Regarding U.S. investment in Brazil, between 2007 and 2012
American companies' total stock of assets in the Brazilian
market grew by 37% to US$283 billion, representing 53% of
all U.S. assets in South America. These investments generated
approximately 600,000 jobs in Brazil, in strategic sectors such
as telecommunications, metals, auto assembly, financial
services, renewable energy, and oil & gas.
The following table summarizes the main vectors in this
important relationship: the strong presence and significant
growth of Brazilian assets in the USA and of American assets
in Brazil; extensive Brazilian participation in the economies
US$283 billion
TOTAL MAJORITY-OWNED ASSETS, 2012²
BRAZIL - UNITED STATES
UNITED STATES - BRAZIL
Value of assets in recipient country
US$93 billion
Asset growth rate (2007-2012)
221%
Jobs generated in recipient country
FDI STOCK AND INFLOWS, 2010-2012 (ACCUMULATED)³
FDI stock in recipient country
FDI inflows into recipient country
BROADNESS OF INVESTMENT FLOWS (2003-2015)4
U.S. states impacted
MAIN SECTORS AND SHARE OF TOTAL ANNOUNCED FDI (2003-2015)³
Sector (share of total)
of different U.S. states, whether as recipients of Brazilian FDI
or sources of FDI for our country; and diversification of the
sectors affected by these investments in both countries.
In international debates about the effects of FDI on the economies
of emerging countries, there are two opposing arguments: 1)
that such activity may reduce exports and employment; and
2) that it strengthens the economy of the investing country,
helping to boost exports and attract new investments.
Recent analyses involving Brazilian multinationals show no
evidence that investing abroad reduces exports, employment,
or even domestic investment. On the contrary, Brazilian
multinationals have performed better in terms of industrial
exports than other domestic companies, including during the
last international crisis. In addition, there is evidence that
the decision to invest abroad makes it possible to increase
exports threatened by competitors from third countries, helps
strengthening the company's position in the domestic Brazilian
market and enables exports from Brazil to foreign subsidiaries.
76,000
BRAZIL - UNITED STATES
US$10 billion
US$5.8 billion
BRAZIL - UNITED STATES
29 inflow destination states
BRAZIL - UNITED STATES
Oil & Gas (27.2%)
Metals (9.7%)
Textiles (8.4%)
37%
598,000
UNITED STATES - BRAZIL
US$355 billion
US$13.5 billion
UNITED STATES - BRAZIL
41 outflow origin states
UNITED STATES - BRAZIL
Communications (21.2%)
Metals (12.9%)
Automotives (11.6%)
This report, produced as part of an initiative between the
Brazilian Trade and Investment Promotion Agency (Apex-
Brasil), the Brazil Industries Coalition (BIC) and the National
Confederation of Industry (CNI), is aimed at highlighting the
importance of investment flows between the two countries,
mapping the sums involved, the main sectors and the effects
on job creation in both countries. It also illustrates, through
statements by large companies such as Stefanini, Fitesa, JBS,
EMC² and GE, the deployment of Brazilian capital in the USA
and American capital in Brazil.
The intention of this initial mapping is to encourage more and
better investments between the two countries, focusing not
only on developing local productive capacities in Brazil and
the USA, but also on the positive effects of these investments
- generation of jobs and income, and export growth - in the
regions that receive them.
1 At the end of this Report, there is an FAQ section that presents concepts related to the topic of
foreign direct investment and explains some of the terms presented in the analysis.
2Source: US Bureau of Economic Analysis
3Source: UNCTAD
4Source: FDI Markets
5Source: CNI/CINDES. Relatório de Investimentos Brasileiros no Exterior
("Report on Brazilian Investments Abroad"), 2014
5View entire presentation