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neoliberal privatization, especially of the telecommunication and banking sectors,
had produced a move from production intensive sectors to the services sector. In
Brazil from 1991 to 2002 “only 0.1% of revenues from privatization (which totaled 42
billion US-dollars) came from German firms.” 222
This rise in FDI in Brazil, however, has not produced any impact on development,
but to the contrary: According to a Unicamp study in 1997, around 95 percent
of FDI occurred in the area of M&A and thereby had no impact on job creation 223 and
only five percent was categorized as Greenfield Investment. 224
In general terms the strategic orientation of FDI in Brazil– focussed on the internal
markets of Brazil or MERCOSUR, and thereby not on exports to the world market
- had not changed until the end of the nineties. 225
At first glance one might get the impression, that through the relatively high FDI
inflows from 1998 to 2000 into the privatized service sector, like telecommunications
and banking, nothing has changed with this scenario of orientation towards
the internal market. But for an economy like the Brazilian one it is macroeconomically
essential to get FDI into the country with the hope that this might stimulate the
internal market. But the economy is forced by market logic to use these FDI –flows,
above all, in order to attract additional foreign currency – and this is mainly through
exports. This picture might change, but the exact course is currently hard to predict.
A trend in this direction, however, is very likely to occur as not only the foreign corporations
which operate in MERCOSUR are interested in profits and comparative cost
advantages – which is often labeled with the nice term “efficiency seeking”, but also
the four MERCOSUR governments are very keen to obtain export surpluses in order
to avoid strong disequilibria in the balance of payments and to avoid new financial
crises.
And in this sense both governments and corporations – in this case hand in
hand – would welcome a free trade agreement – the only question seems to be the
details of this agreement. The different interests of the participants on both sides of
the Atlantic related to the rapid conclusion of an “Interregional Association Agree-
222
Peter Rösler: Ausländische Direktinvestitionen in Lateinamerika, Ibero-Amerika Verein der Deutschen Wirtschaft,
July 30, 2003.
223
Maria Silvia Portella de Castro: Mercosul e União Européia: relações econômicas e comercias e as negociações do
Acordo de Cooperação Inter-Regional, January 2003, p. 13-14.
224
Folha de São Paulo, June 4,1999, cited in: Maria Silvia Portella de Castro: Mercosul e União Européia: relações
econômicas e comercias e as negociações do Acordo de Cooperação Inter-Regional, January 2003, p. 13.
225
See, e.g.: Jost, Thomas / Nunnenkamp, Peter: Bestimmungsgründe deutscher Direktinvestitionen in Entwicklungsund
Reformländern - Hat sich wirklich etwas verändert?, Kiel Working Paper No.1124, August 2002; or: Peter
Nunnenkamp: Foreign Direct Investment in MERCOSUR: The Strategies of European Investors, in: Paolo Giordano
- Chaire MERCOSUR de Sciences Po [edit.]: An Integrated Approach to the European Union - MERCOSUR
Association, 2002.
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