Brazil is one of the hottest destinations in the world today for inbound foreign direct investment (FDI). Many multinational companies are seeking to enter with new or expand existing FDI projects due to Brazil’s market size, growing middle class and the fact that it will host the 2014 World Cup and 2016 Olympics. In fact, according to UNCTAD’s Global Investment Trends Monitor it was the 10th largest recipient of FDI in 2010 with over $30 billion in new inbound FDI projects up from the 13th slot and $22 billion in new inbound FDI a decade ago.
However the vast majority of FDI has traditionally been concentrated in the country’s South and Southeast states (Rio de Janeiro, Rio Grande do Sul and Sao Paulo). According to the Financial Times fDi Markets database more than 85 percent of all new FDI projects in Brazil went to those southern states (Figure 1).
Recent evidence suggests that this dynamic may be changing. Many multinational companies are now realizing that they can no longer have emerging market strategies which solely look at those markets largest cities. A recent article in the McKinsey Quarterly suggests that multinationals may not be tapping into new growth opportunities in frontier regions of emerging markets fast enough. Multinational companies seeking to gain a competitive edge and access markets with tremendous growth potential should be looking at opportunities for investment outside the traditional investment centers in economies like Brazil, China and India.
In Brazil this means that many multinationals are beginning to look at the north – the most resource rich and northeast - the most populous but historically poorest (incomes are half the level of those in Sao Paulo) regions as potential destinations. These two regions have tremendous room for future growth and investors are starting to realize these opportunities. For example, the Italian car manufacturer FIAT recently announced it is investing US $1.78 billion in an Automotive OEM manufacturing project in Pernambuco state and Nestle Brazil, a subsidiary of Switzerland-based Nestle launched a floating supermarket to service the riverside populations of the Amazon.
Now thanks to an effort by the countries national investment promotion agency; APEX-Brasil with technical assistance from the IFC’s Investment Climate Advisory Service many of the state governments such as Para in the North and Pernambuco in the Northeast are ready to facilitate these new investors through their investment promotion intermediaries; Invest Para and Invest in Pernambuco. Now as the battle to access the wallets of these consumers heats up they will be ready to take advantage of these opportunities to economically develop and grow their states.
Figure 1: Majority of FDI into Brazil goes to South and Southeast regions (source: Financial Times fDi Markets Database, 2011) 
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