Foreign Direct Investment And Balance Of Payments In Brazil: 1994-2008

When the world economy is in moments of expansion, international liquidity expands and, therefore, capital flows also into the peripheral countries. However, these latter countries engage in speculative finance become vulnerable, because a change in expectations can cause a reflux of capital and cause seizures. This process is consistent with an approach of financial instability hypothesis of Minsky (1977), applied to an economic environment opened. In 90s years, there was an expansion of international liquidity and reintegration into Latin America in the International Financial System, especially from the Plan Brady. Several countries in the region have resorted then to external finance. However, from the Mexican crisis of 1995, capital flows have become a large part of foreign direct investment (FDI). Some authors, including Kregel (1996) and Laplane and Sarti (2002) began to question whether the flow of FDI is a limiting economic growth, from an analysis of the Balance of Payments. That is, if it were stanched the flow of FDI and sustained capital outflows proviniente of FDI in previous periods, there could be a constraint to growth from the external sector. The aim of this study is to assess the relationship between foreign direct investment (FDI) and long-term growth in the period between 1994 and 2008. There was a survey of theories on the subject, with a change in the approach proposed by Lima and Carvalho (2009).