Have foreign investors really turned on Brazil?

For emerging economies such as Brazil, the ability to attract foreign direct investments (FDI) is crucial to bringing dynamism and growth. More than money itself, this kind of investment is focused on real assets—such as factories—which in turn create jobs, develop infrastructure, and open up channels for technology transfer that otherwise wouldn’t be possible.

But to convince foreigners to run the high risks inherent to productive enterprises, countries must project promising returns. As Latin America’s biggest market—and one of the largest in the world—Brazil is always an attraction. However, according to consultancy firm A.T. Kearney, Brazil’s market size and potential are matched only by its economic and political uncertainties—a trait we share with other countries in the region.

That has led to Brazil’s exclusion from A.T. Kearney’s annual Foreign Direct Investment Global Index, which ranks the 25 most trusted countries for investments. For the first time since the list was created, in 1998, Brazil is nowhere to be seen. The report is based on research with 500 executives and measures the markets likely to attract the most investment in the next three years.

As we stated in our May 8 Daily Report (for Platinum subscribers), Brazil had been...