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As globalization occurs, national economies develop an interdependence with one another to continue to grow. One example of the interdependence between two countries is the Foreign Direct Investment (FDI). A FDI is an investment made over international borders that seeks to achieve an enduring enterprise in the host country. Paraguay is a potential destination for FDIs from US investors, but risk is evident. This paper will discuss a business proposition for a FDI in Paraguay and provide three reasons for this investment. Prior to the business proposition, the general background of Paraguay will be given.
The Republic of Paraguay is a relatively small country (157,047 sq. mi.) that is about the size of California with a population of 6.46 million. It is located in South America and landlocked between Bolivia, Brazil, and Argentina. The major nature resources consist of hydroelectric energy, timber, iron ore, and manganese. Agriculture drives the market economy that is overwhelming informal. This leaves the Gross National Income (GNI) per capita based on Purchasing Power Parity (PPP) at a low $3,290.00US. The country mainly exports is agricultural products, soy beans, sugar, and beef, to Uruguay, Brazil, and Argentina. Hydropower is also exported as the country continuously has a surplus. This leads to major imports of machinery, electric machinery, and motor vehicles/tractors from China, United States, and Brazil. Currently, Paraguay is seeking re-admittance to the trade organization MERCOSUR after the country was suspended following former president Lugo’s impeachment. . On April 21, 2013, Paraguay held a presidential election. Businessman Horacio Cartes, of the Partido Colorado party, won the election with 46 percent of the vote. Paraguay is a constitutional republic with executive, legislative, and judicial branches similar to the United

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