This paper analyzes the challenges and opportunities brought by foreign direct
investment in general and in Brazil particularly. The study is based on literature review and
statistical data show that foreign direct investments have important effects on the business
environment of the host country as they bring productivity improvement, formal employment
and income generation, increase on the export level, establishment of firms with high
innovation standards and the capacity to improve the quality of national products, with some
degree of technology diffusion, increases in the network of suppliers and possible buyers, and
the introduction of new strategies of business management, logistics as well as other ways of
modernizing industrial structures. It concludes that the major benefits from foreign direct
investments are the change on local companies strategies. The study also shows that
investments are concentrated on most developed areas and that there is no specific strategy for
investment attraction to the less economically favored areas of Brazil.
