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The state protected coffee plantations through a buffer stock scheme known as valorization and was instrumental in setting up banks and engineering schools. The benefits of sovereignty were exemplified in the way Brazilian railways were developed. The Brazilian state might have provided concessions to private investors in railways, but it was still able to exercise considerable control over the nature of equipment, and passenger and freight rates (Topik 1979). Moreover once these concessions started to become burdensome, Brazil’s government borrowed funds from foreign countries to nationalize most of the railroad system.

In the case of India, a classic colony by all definitions, the use of monopoly power by Britain was much more explicit. Britain restricted access by Indians to finance, land and labor by legal and extra-economic methods. In the case of the Indian railways, Indian entrepreneurs were not allowed to invest in them (Bagchi 2002). Further, despite public outrage, guaranteed returns were not abolished. Thus, in India foreign domination left little room for domestic classes to bargain with British interests, which, in turn, generated animosity towards foreign presence in the economy. In Brazil, in contrast, a sovereign state protected domestic interests (at least for the domestic elites) creating a conducive and accommodating atmosphere for foreign capital.

It is thus evident that historically, the evolution of political and social institutions followed different paths in the two countries. These differences translated into two distinct FDI policies. By the 1980’s both nations were confronted by severe macro-economic imbalances. In Brazil there was a growing sentiment against the state both within the middle class and the business elites (Amann and Baer 2002). Similar changes were taking place in India. Big business houses, which were once opposed to foreign investments, had by now matured and strengthened their positions in the economy (Kohli 1989). A sum of all these changes resulted in the adoption of neo-liberal policies starting in the 1990’s.

FDI: Trends and Patterns

FDI inflows are shown in Table 1. The data indicate that Brazil has been much more successful than India in attracting FDI between 1970 and 2010. While the differences between FDI inflows to the two countries have declined in the neo-liberal era, India continues to lag behind Brazil in terms of FDI inflows. As a percentage of GDP, FDI inflows to Brazil stood at 3.3% in 2002 and 2.3% in 2010. In case of India FDI inflows were 1.1% of the GDP in 2002 and reached 1.5% by 2010.

In the case of Brazil, the US had been the largest contributor to FDI throughout most of the 20th century. In 1951 the share of the United States in Brazil’s FDI stock was 43.9%, gradually declining to 24% in 2000 and to 17% in 2005. By the latter year the share of many other countries became significant, including Germany, Japan, the U.K., France and Spain. In the case of India, Europe, especially Britain has always been a major source of FDI. However, in the neo-liberal era, FDI sources have diversified. USA and Singapore have become important sources of FDI. Tax havens like Mauritius, which accounted for 50% of FDI inflows in 2005-2009, have become substantial sources of FDI (Dhar and Rao 2011).

A striking feature of the neo-liberal era is the phenomenal increase in FDI outflows from both India an本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。