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Sample essay topic, essay writing: Foreign Investment In Brazil - 1077 words
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INTRODUCTION "For those who believed that Brazil would forever be the country of the future, I have a piece of bad news. The future has finally arrived." For years, the largest and most industrialized nation in Latin America has been known as the country of tomorrow. That slogan may soon be out of date. Under the guidance of former finance minister and current president, Fernando Henrique Cardoso, this tenth largest economy in the world, once known for its high tariffs and even higher inflation, has entered a period of steady growth, the fruit of a newly-stable political and commercial environment. In combination with the upturn in its economy, Brazil's demonstrated preference for foreign products and strong direct investment presence bode well for expanded sales of equipment and services in future years.
EMERGING SECTORS Access to Brazilian markets in most sectors is generally favorable, and competition and participation characterize most markets by foreign firms through imports, local production and joint ventures. Many sectors such as healthcare, the environment, transportation, telecommunications and financial services, have been growing at a phenomenal rate and opportunities to further expand trade and investment are highly encouraged. Healthcare Technology Brazil is an excellent market for U.S. manufacturers of health technology products and services. In the medical device sector, the products that should have the best long-term prospects in Brazil are medical imagining equipment, electro-diagnostic apparatus and technologically advanced disposable medical products. In the pharmaceutical sector, long-term prospects for over-the-counter drugs and vitamins are excellent because of the high cost of private medical assistance and a growing trend towards home treatment
In the healthcare services sector, the best market opportunities include the following areas: hospital management and consulting services training for allied health-care personnel hospital renovation health maintenance organizationsIn order to provide more efficient health care, the Brazilian government has begun to reform the country's entire medical care delivery system. It has decentralized the system, giving more autonomy to the states and cities in the planning and controlling of local health care programs. Overall, improvements in Brazils public healthcare sector, coupled with its trade liberalization measures, should improve the prospects for U.S. technology firms in the Brazilian market.Environmental Technology The Brazilian market for environmental technology had an estimated value of over $1 billion in 1994. However, the National Department of Sanitation and Environmental Equipment estimates that the total investments needed to equip Brazil with necessary pollution control supplies and services amounts to over $19 billion. The Brazilian market-size, alone, makes it worth consideration: its population is the largest in Latin America. Additionally, Brazil's diversified industrial and agricultural base has proved a ready market for a wide array of environmental goods and services. Also significant are recent and anticipated moves towards trade liberalization.
Brazilian tariffs affecting pollution control equipment have been lowered from 25 to 20 percent while non-tariff barriers such as quotas and voluntary export restraints have, in a large part, been eliminated. Finally, a growing environmental awareness, including stricter fines for non-compliance with environmental standards, is catalyzing demand for foreign environmental goods and services.Transportation Brazil is the tenth largest car producer in the world. Brazil's success in automobile sales is due to a government decree which virtually eliminated the federal industrial products tax on small "popular models" such as the GM Corsa, Volkswagon Golf and Fiat Uno. The decree includes commitments by the automakers to pass on the entire tax reduction to consumers and to expand production and employment. These incentives apply only to specific locally assembled vehicles meeting strict local content requirements. Another aspect of the automotive industry is auto parts. Brazil's current market-opening policy is to promote the sector in order to boost investment in manufacturing processes, training and research.
However, trade sources have reported that some manufacturers are unable to invest and therefore achieve the necessary international quality and price standards. Thus, motor vehicle manufacturers are expected to increase purchases of automotive parts manufactured abroad. This condition represents a huge long-term trade opportunity for American automotive parts suppliers. The amount of imported U.S. equipment is expected to increase an average of ten percent per year during the next few years because of lower transportation costs (in comparison to Europe and Asia) and the relatively high acceptance level that American automotive parts have historically had among Brazilian customers.
Other important elements influencing sales of American parts in Brazil include: American products have been used in Brazil since the birth of their motor vehicle industry. The U.S. export potential is great as high-tech, high-quality U.S. parts will increase in demand as the market grows at its high estimated rate. U.S. competitive stance will improve in Brazil as demand for parts increases and tariffs decrease.The most important purchasing factors are price and quality. Nevertheless, Brazilian customers favor products that have already been successful in the international market.
Products that have been standard approved and have good brand recognition are readily acceptable to potential buyers in Brazil.Telecommunications Equipment and Services Brazil's telecommunications market has enormous potential. In order for the country to modernize its governmental and economic structures, it must upgrade its communications services. Further liberalization of the telecommunications sector should create a tremendous market for U.S. products and services. A constitutional amendment, which would allow greater private company participation in the telecommunications sector and eliminate their monopoly company, Telebras, is currently under review by the Brazilian congress. U.S. companies are also encouraged because the import tariffs on communication projects are falling.
Liberalization of Brazil's telecommunications sector will also contribute to growth in computer hardware, software and information services, as communications costs drop and technology is upgraded.Financial Services Brazil has a large and sophisticated financial sector that provides a wide range of services, but despite their impressive credentials, they are in need of financial insurance providers. They are an especially large potential market for the U.S. Relatively recent data illustrates this market potential- Brazil's 1994 premiums per capita of $34 and premiums/GDP ratio of 1.8 percent are low compared to other key Latin countries. About 105 companies and a government-controlled monopoly re-insurer currently serve the Brazilian market. A number of foreign insurers, including U.S. insurance providers, have ownership interests in Brazilian insurance companies. Nevertheless, access to and treatment in Brazil's insurance market is relatively restricted.
Foreign insurers' participation is limited to 50 percent of the capital and about one-third of the voting stock of a Brazilian insurance company. However, in a move that could benefit U.S. and ot ...
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