TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

BRAZIL
Trends and impacts of foreign investment in
developing country agriculture
as Favourable Support, Forest Resources and
Adverse Actions can be almost three times
better.
It is beyond the scope of this study to
calculate the most recent score Brazil can obtain
in the corresponding indicators for agriculturerelated
investment attractiveness. Such calculation
should be undertaken periodically for the design,
monitoring and evaluation of interventions. In
addition, a simultaneous calculation of these
indices for various countries can allow for
comparison, help investors to identify those
countries that are better suited for establishing
their businesses, and ultimately foster an
environment of healthy competition among
countries.
5. Business climate improvement
process to attract FDI into the
agriculture sector
Through IAIF, Brazil has learned how it
benchmarks relative to other countries, and
understands how various factors foster or deter
from business ventures. The analysis showed
that Brazil, with its abundant natural resources,
has room to further its enabling environment.
With this information at hand, the challenge for
the Government of Brazil is how to improve the
investment climate, and thus increase the inflow
of FDI. The object of this section is to present a
methodology for this purpose that was prepared
by the Inter-American Development Bank,
called the Forestry Investment Business Climate
Improvement Process (PROMECIF). PROMECIF
uses the results of IAIF, both its indicators and
sub-indices at all stages of the process, either
as elements of analysis, intervention design,
simulations, or as indicators for monitoring and
ex-post evaluation. Although IAIF and PROMECIF
are designed for the specific purpose of forestbased
investments, they may also be used in
other sectors of the economy.
The methodology seeks to help countries
improve their business climate through the
implementation of a process that is both
systematic and cyclical. First, the country
confirms its intent on taking steps to make
necessary adjustments, carries out a diagnosis
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of the situation, defines the strategy, and then it
designs, implements, monitors and evaluates an
Action Plan.
5.1 Overall process
PROMECIF is a cyclical process that seeks to
identify, develop, implement, monitor and
evaluate actions that pertain to factors that
affect the attractiveness of a country for foreign
investors. The process is divided into three
interdependent phases (Chart 4). Since the
purpose of this section is to explain how this
process can be useful to understand Brazil’s
situation, the following deals mostly with Phase II.
Phase I – Country identification and change
commitment
Phase I consists of three stages: (i) promotion,
(ii) identification, and (iii) setting up of the
Coordinating Committee. In the promotion
stage IAIF results are presented to stakeholders.
The results show the country’s performance in
absolute terms or relative to other countries
or subregions, and signals the critical
factors that affect the investment climate
for sustainable forestry businesses. It is at
this stage, and motivated by those involved
in the private sector, that the government
may be persuaded to apply the PROMECIF
methodology, which is formalized by the signing
of a commitment (identification phase). This
stage is completed with the constitution of a
Coordinating Committee (CC) that organizes
the implementation of phases II and III of
PROMECIF. The CC should allow for stakeholder
participation, and should be located, whenever
possible, within the scope of national
institutions promoting competitiveness.
Phase II – Diagnostic and strategy
definition
The outcome of phase II is the definition of a
strategy to improve the business climate for
forest-based business investments, and the
process includes a Diagnostic stage and an Action
Plan.