Although many commentators consider that the steps taken by capital-importing states to attract foreign investors as submission gestures, I just read a fascinating article describing how the Brazilian government’s FDI (Foreign Direct Investment) policies actually succeeded in this undertaking.

Here are small abstracts of the article ‘Private Equity in Brazil: Entering a New Era’ by Daniel de Souza, Porter Leslie, José Luis González Pastor and Carol Strulovic.

Key Regulatory Modifications

Several major changes in legislation have increased the country’s attractiveness for both local and foreign PE investors. One of the most important improvements for PE investment in Brazil occurred in 2003, when the government passed several laws to legally adopt the registration of PE funds, to regulate such establishments, and to address their formal obligations in a method similar to that of the Limited Partner (LP) structure of funds in the U.S. and Europe. In the past, the funds had no clear legal framework on which to base their activity beyond acting as an offshore investor. This changed in 2003 with the introduction of FIPs (Fundos de Investimentos em Participações), investment vehicles that benefit from tax exemptions on capital gains, as found in other developed PE markets.

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