...almost doubling their share from the pre-crisis level. BRICS now account for over one fifth of global FDI with China gaining the 2nd spot, Russia 3rd and Brazil 7th in the list of top 20 host economies of 2013.The current share of global FDI inflows to BRICS is at 22 per cent which is twice that of their pre-crisis level, according to the UN Conference on Trade and Development (UNCTAD) report. Total inflow to BRICS reached $322 billion in 2013, up 21 per cent from 2012. INTRODUCTION: South Africa outperformed other countries within BRICS, with FDI inflows rising by 126%. With inflows to China at an estimated US$127 billion, including both financial and non-financial sectors – the country again ranked second in the world, closing the gap with the United States to some $32 billion, FDI inflows to the Russian Federation jumped by 83% to US$94 billion making it the world’s third largest recipient of FDI for the first time ever, The rise was predominantly ascribed to the large acquisition by BP (United Kingdom) of 18.5% of Rosneft (Russia Federation) as part of Rosneft’s US$57 billion acquisition of TNK-BP. India ranked 16th among the top 20 global economies, receiving the maximum FDI, with Asia regaining the top spot as the “largest host region”. FDI inflows into India grew 17 per cent to $28 billion in 2013 despite unexpected capital outflows in the middle of the year, according...
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...Brazil is a country that has seen income inequality drop of the last decade, unemployment is at near record lows, and there has been substantial middle class growth. By most estimates, 40 million people have been pulled out of poverty in the last decade and extreme poverty had been reduced by 89 percent. Nocera, Joe; "Does Brazil Have the Answer," The New York Times, 20 Jan, 2014. Brazil is the largest of the Latin American countries and covers nearly half (47.3%) of the continent of South America. It occupies an area of 3,386, 470 square miles and is the fifth largest country in the world after Russia, Canada, China, and the United States. According to the Central Intelligence Agencies World Fact Book, Brazil's economy is characterized by a large and well-developed agriculture, mining, manufacturing , and service sector. Once a third world country, Brazil has experienced rapid growth and boasts a rapidly expanding middle class. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled...
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...1. What would happen if Brazil allowed the real to float freely in FX markets: a. Immediately If the government did not intervene to weaken the real to around R$2, I suspect the real would be much stronger. This would propel imports and also capital inflow into the country due to the high interest rates. Since the government wanted to make Brazil competitive for exports, a weak currency would dissuade companies from exporting since they would earn less in revenue for every $ exported. Further with a free currency and no capital controls, the ease of investing and removing capital would make the Brazilian stock market (which as it is, is very small) more susceptible to foreign capital. b. Medium term (1-2 years)? In the medium term, the movement in the real would dependent on several factors such as: global sentiments, status of the euro crisis, relative attractiveness of other market (such as Mexico, Africa, South East Asia) etc., However it would be ideal if the real was stable in the range of R$2 +/- 10% This would ensure stability in the economy and capital markets. A strong currency would encourage imports while a weak currency would discourage investments. Further a weak currency would also make the corporates in Brazil nervous as they will need to pay more reals for every $ of debt on their books. Would these be adverse developments for Brazil? Why? I think it is important to have stability in the currency before allowing it to float freely. Brasil is still...
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...KNH 313 Sport Economics and Finance Assignment #3 Economic Impact of the FIFA World Cup 2014 on the Host Destination Brazil Table of Content Introduction 3 Economic Impact 3-4 Event Tourism 4-5 Image and place marketing 5-6 Urban development and renewal 6-8 Social development 8-9 Conclusion/Discussion 9-11 Bibliography 12 Introduction The purpose of this report is to analyze and define the economic impact of the FIFA World Cup 2014 in Brazil. An economic impact report allows public sector bodies to analyze their economic return on investment and it also demonstrates how events drive economic benefits that enable event organizers to develop practices maximizing these benefits. (eventIMPACTS) In 2007 Brazil was announced as the host of the world`s biggest football event, the FIFA World Cup 2014. This will be the second time the country has hosted the competition, making Brazil the fifth country to have hosted the FIFA World Cup twice. This extraordinary event will be held from 12 June till 13 July and will take place in 12 stadia spread over Brazil. (Brazilian Federal Government) This paper begins with an overview of the economic impact by hosting this event. Furthermore I will outline the impact of the 2014 FIFA World Cup on tourism, the destination image and the development of infrastructure. I will then conclude by identifying...
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...Impact of the Asian Financial Crisis in 1997 and effect to Latin America Name: Institution: Date: Abstract In 1997, the Asian Financial Crisis spread rapidly all over the Asia and affected almost all the economies in the world. Prior to the Asian Financial Crisis, the Asian countries such as Thailand, Malaysia, South Korea, Indonesia, Hong Kong and Singapore experienced a remarkable growth in the economy that was considered the highest in the world. These Asian economies increased by a notable proportion of 6 to 10 percent annually in the GDP. However, what had been regarded as an Asian miracle seemed to crumple down rapidly 1997 when these Asian countries were faced with a severe financial crisis in their local stock and currency markets. When the economies started recovering from the crisis in 1998, the stock markets in several countries had considerably lost more than 70 percent of their worth, while their currencies depreciated in comparison to the US dollar (Pettis, 2001). The Asian Financial Crisis also affected several nations in the Latin America as they experienced a relentless economic meltdown that had detrimental effects to the economies. For instance, the financial crisis force multinational firms to close down due to liquidation, the banking system deteriorated and this forced high levels of lay-offs leading to unemployment. In addition, the financial crisis resulted in the loss of the people’s purchasing power in the Latin American while nations turned to...
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...for investment in the plastics industry in Brazil by GE. To get a better understanding, the report has been broken down into four parts – 1. Evaluation of the Brazilian plastic industry, market structure and demand 2. GE and Brazil 3. The current health of the Brazilian economy measured by the major macro economic factors 4. Strengths and Weaknesses Brazilian plastic industry The Brazilian plastics industry comprises resin manufacturers, machine manufacturers, additives suppliers, tool makers and more than 11,000 converters and plastics recyclers. The major Brazilian resin manufacturers supply a wide profile of grades of plastics resins, such as Polyethylene (LLDPE and HDPE), EVA, Polypropylene, PP compounds, PVC (flexible, rigid and compounds), Polystyrene, PET, SAN, ABS, Polycarbonate and others. Additives, master batches and other basic chemicals are also provided by a number of other raw material suppliers. The industry offers a broad range of products for the automotive, electrical, electronics, IT, packaging, medical, household appliances, agricultural and construction industries. Having a strong manufacturing base with more than 11,000 companies, the Brazilian conversion industry operates with a variety of production processes, such as injection moulding, extrusion, blow moulding, thermoforming and others. The plastics recycling industry has also become relevant in the last decades. Market Structure - Brazil has 3 large petrochemical complexes, as well...
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...for investment in the plastics industry in Brazil by GE. To get a better understanding, the report has been broken down into four parts – 1. Evaluation of the Brazilian plastic industry, market structure and demand 2. GE and Brazil 3. The current health of the Brazilian economy measured by the major macro economic factors 4. Strengths and Weaknesses Brazilian plastic industry The Brazilian plastics industry comprises resin manufacturers, machine manufacturers, additives suppliers, tool makers and more than 11,000 converters and plastics recyclers. The major Brazilian resin manufacturers supply a wide profile of grades of plastics resins, such as Polyethylene (LLDPE and HDPE), EVA, Polypropylene, PP compounds, PVC (flexible, rigid and compounds), Polystyrene, PET, SAN, ABS, Polycarbonate and others. Additives, master batches and other basic chemicals are also provided by a number of other raw material suppliers. The industry offers a broad range of products for the automotive, electrical, electronics, IT, packaging, medical, household appliances, agricultural and construction industries. Having a strong manufacturing base with more than 11,000 companies, the Brazilian conversion industry operates with a variety of production processes, such as injection moulding, extrusion, blow moulding, thermoforming and others. The plastics recycling industry has also become relevant in the last decades. Market Structure - Brazil has 3 large petrochemical complexes, as well...
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...1. Explain the following concepts with necessary examples and outline their importance for an economy: nominal exchange rate, real exchange rate, nominal effective exchange rate, real effective exchange rate EXCHANGE RATE : An exchange rate is the current market price for which one currency can be exchanged for another. NOMINAL EXCHANGE RATE: It is defined as the actual foreign exchange quotation in contrast to the real exchange rate, which has been adjusted for changes in purchasing power. MATHEMATICAL FORMULATION : The nominal exchange rate e is the price in domestic currency of one unit of a foreign currency. e.Pi=Pi* Here: • e denotes the nominal exchange rate of the domestic currency in terms of the foreign currency • pi denotes the price of good i in domestic in domestic currency • e.pi is the price of the same good in domestic in foreign currency • *pi denotes the price of the same good in the foreign in foreign currency REAL EXCHANGE RATE: Basically, the real exchange rate can be defined as the nominal exchange rate that takes the inflation differentials among the countries into account. Its importance stems from the fact that it can be used as an indicator of competitiveness in the foreign trade of a country. The Real Exchange Rate Definitions The various definitions of the real exchange rate can mainly be categorized under two main groups. The first group of definitions is made in line with the purchasing power parity. The second...
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...macro exposure of Grendene, a Brazilian shoe manufacturer will be analysed. Grendene’s vulnerability and market exposure will also be accessed. Moreover the level of protection of the company will be approached. 2. Macro effects of an increase in world interest rate on the Brazilian economy Brazil is one of the fastest growing countires in the world and is part of the so called BRIC economies (Brazil, Russia, India and China). Currently the Brasilian Central Bank basis rate SELIC (Brazilian Central Bank’s rate for overnight lending) is at 8,50% p.a. (COPOM - Committee of Monetary Policy). Even if this rate is low compared to historical rates (Figure 1) it continues to be one of the highest interest rates in the world, atracting a high flow of international investments. Due to the large capital inflows, the Brazilian Real has appreciated in the last years diminishing the competitiveness of Brazilian products in the world market. Since 2009, Brazil has experienced high capital inflows mainly due to abundant global liquidity and high interest rates compared to developed countries (OECD, 2011). [pic] Figure 1: Historical interest rates in Brazil (Source: Banco Central do Brasil) In a general point of view, an increase in interest rates will cause a decrease in aggregate demand as it will lower consumption and investments (Begg & Ward, 2009). The cost of borrowing will increase, diminishing the demand for money. Furthermore, the propensity to...
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...was looking for the most desirable financing alternative for Morris de Minas Ltda, its Brazilian affiliate, in the working capital needs of 82,650 million cruzeiros or US $39,320,000; at the exchange rate of 2,102 cruzeiros per US dollar. David Albuquerque, the vice-president of finance for the Latin American Division, was in charge of exploring possible financing arrangements and preparing a financing alternative plan. Albuquerque believed that Brazilian expected inflation rate and tax legislation, and the future exchange rate would play major roles in his analysis although it was not easy to predict. However, as a company’s consultant, we would help Mr. Albuquerque make the most effective decision that associated with the least risk possible. Company Background Morris was a manufacturer of super-mini computers located in Hackettstown, New Jersey. As it had gone globally a long time ago, by 1983, the revenue the company earned mostly from outside the United States In 1971, Morris (USA) entered the Brazilian market by assembling and distributing computers in Belo Horizonte, in the state of Minas Gerais. After its products became known for the high quality in the late 1970s, Morris expanded its market to Brazil to manufacture and distribute a line of super-minis, including a full line of disk drives, printers, and other peripherals. Sales in Brazil mainly focused on medium-sized enterprises, foreign and domestic, and were made on a revolving and installment credit basis...
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...the two years since A.T. Kearney released its last Foreign Direct Investment Confidence Index, the global economy has faced unprecedented turmoil—a housing market collapse, a banking system teetering on the edge, rising unemployment and falling sales across almost all industries. In the 2010 FDI Confidence Index®, we examine the future prospects for international investment flows in the context of these tumultuous times. While conditions have improved, senior executives at the world’s largest companies remain wary of investing during the current climate, and few expect a full turnaround before 2011. Amid the economic downturn of the past two years, several emerging markets remain attractive to foreign investors. China, India and Brazil are in the top five of the 2010 Foreign Direct Investment (FDI) Confidence Index, while emerging markets with large consumer bases, such as Indonesia and Vietnam, also rank highly. However, some smaller, more open emerging economies dropped in the rankings. For example, Hong Kong, a globalized economy according to the A.T. Kearney Globalization Index, fell to 14th.1 In Asia, investors are...
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...The effect of trade Balance of payment = CA (current account) + CI (capital account) (trade) (investment) (Export/import) (Cash inflow/cash outflow) Trade is buying and selling Investment is invest When you export > than import = Surplus When you import > than export = Deficit Cash inflow > Cash outflow = Surplus Cash outflow >Cash in flow = Deficit * Exports balance the trade account * Attainment of economies of scale is a benefit of exporting * Imports expose firms to new competition * US has had a trade deficit since 1975 * Singapore on the contrary has a trade surplus over a long period of time * Imports expose firm or company to new competition * Imports may compete with local production which in turn may result in job losses * Export may deprive the local market and may force up the price The effect of international investment * Foreign Direct Investment (FDI) is a substitute for trade activities * Investment targets are diversifying, for example, China and Brazil (BRICS) * China is a magnet for FDI, attracting more FDI inflows than the whole of Africa combined * The most important new development FDI in this century is outflow of FDI from China ($1b in 2000 to $68b in 2010) 3B Following methods * ‘Voluntary’ import restraints * Tariffs * Non-tariff barriers * Many actions are contrary to what we know is good for the world and its citizens Increase tax All this is becoz they want...
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...REPORT – BRAZIL Distribution of income Brazil has historically a very unequal income distribution. In the 90´s Brazilian government believed that if high inflation rate were cut down, the income distribution would improve. In fact, after a successful plan of stabilization of the inflation, the unequal pattern of income distribution did improve in a consistent way in this decade. Other important aspect about income inequality in Brazil is related to regional pattern of income distribution, which is extremely unequal between different regions of the country. Although a generally improved distribution of income took place, the differences between regions remained in the 90’s. However, the current level of unequal income distribution is yet very far from the pattern of many developed countries. [1] Growth and structural changes have not altered significantly Brazil's extremely unequal distribution of wealth, income, and opportunity. Despite impressive increments in economic growth and output, the number of poor has risen sharply. Most of the poor are concentrated in the rural areas or in the country's large cities or metropolitan areas. Poverty, measured by the local minimum wage, declined from over 52% of the population, in the beginning of the nineties, to about 38% in 2005, meeting the Millennium Development Goal. Extreme poverty, defined as income of less than a dollar a day (in purchasing power parity), declined from 8.8% to 4.2% in the same period. [2] Trade In...
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...Your name: Saif Ibn Sharif Student number: c3123892 Assignment-1 GSBS6003 Introduction and Overview In this assignment I have selected Poland to discuss its political economy and attractiveness to FDI. Poland alongside a populace of 38 million, a fully liberalized marketplace economy in the center of E urope and presently as a maximum associate of the E.U., has come to be a main recipient of FDI inflows. As a tinier growing marketplace, analyzing its accomplishment in the marketplace for FDI is instructive and relevant for countless supplementary countries. FDI has grown quickly in present years in an increasingly consolidated globe economy. The growing be forehand Collectivist asserts of Central Europe have transitioned to marketplace economies across the l ast twenty years, as in the alike era, globe flows of FDI have increased extra quickly than each suppleme ntary global commercial or commercial transactions. Melodramatic adjustments in the globe commerci al and governmental nature have endowed both the opportunity and momentum to these commercial flows. Globe FDI inflows in 1985 were approximated to be $53 billion. By 1990, aggregate FDI had graspe d $234 billion and preliminary guesstimate for 2006 indicate globe FDI is $1,340 billion1 . This rise in nominal words of extra than twenty periods 1985 level transpired above a twenty year era, even though eras of inactivity and plummet due to governmental unpredictability and commercial uncertainty. In countless spans of...
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...Brazil – Country Report Introduction The country has been expanding its presence in international financial and commodities markets, and is one of a group of four emerging economies called the BRIC countries. Although struggling with social inequality and infrastructural deficits we think that Brazil is already a great world power. Also what attracted us to Brazil as a case study for this report is it’s exotic character. Not many people really know the extent of Brazil’s recent growth and improvements in social security and in overcoming poverty. We expect the labor force and operational costs to be low, like in the other emerging countries like China. However we take in to consideration higher costs involving security and bureaucracy. Chapter 1 – Short presentation of the country The Federative Republic of Brazil is the largest country in both South America and the Latin America Region. It is the world's fifth largest country, both by geographical area and by population, with over 193 million people. It is the largest Lusophone country in the world, and the only one in the Americas. Bounded by the Atlantic Ocean on the east, Brazil has a coastline of 7,491 km. It is bordered on the north by Venezuela, Guyana, Suriname and the French overseas region of French Guiana; on the northwest by Colombia; on the west by Bolivia and Peru; on the southwest by Argentina and Paraguay and on the south by Uruguay. Numerous archipelagos form part of Brazilian territory, such as Fernando...
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