Nexus between Foreign Direct Investment Inflow and EPI Score in Brazil

Abstract

Before 1990, foreign investors could not extensively invest in Brazil because of its stringent and conservative trade policy. However, in 1990 Brazil took a remarkable shift in its trade policy from its previous trends by taking a liberal stance in terms of FDI inflow. The liberal trade policy that Brazil took in 1990 remove all the trade barriers that previously hindered the free flow of FDI in Brazil, the sign of which had been reflected in the steady and gradual incremental FDI inflow in the country after that. This New opening of trade atmosphere had brought with it two very different repercussions. In one hand, it accelerated the economic growth by bringing in investment in the needed sectors; on the other hand this acceleration spurred industrial activities that are accompanied by air and water pollution and deforestation as a byproduct. Since then, environmental health and ecosystem of Brazil have been facing tremendous threat owing to these pollution problems which may indirectly distress the EPI score of Brazil. Keeping these issues in mind, the present study investigates the relationship between FDI inflow and EPI score in Brazil. With the help of descriptive statistical tools as well as Pearson correlation test, this study finds the negative relationship between FDI inflow and EPI score in Brazil.