Market access, resources and a diversifying economy propel an FDI juggernaut.
It might surprise some to learn that the world’s second most popular destination for foreign direct investment, behind only the United States, is Brazil. According to the Organization for Economic Cooperation and Development, Latin America’s largest economy received $64.23 billion in FDI inflows in 2023, and further solidified its No. 2 ranking over the first five months of 2024, when it attracted an additional $32 billion.
Altios, the international business expansion consultancy, hailed Brazil as “an extraordinary choice” for FDI in a summary released in December. “Brazil’s size, diverse economy and long-term growth potential position it as one of the most attractive FDI destinations globally. Its vast natural resources, expanding consumer market and strategic role in global trade create significant opportunities for forward-thinking investors.”
According to a 2024 report by the U.S. State Department, the government of Brazil “actively encourages FDI, particularly in the automobile, renewable energy, life sciences, oil and gas, mining and transportation infrastructure sectors. Investment incentives,” said the report, “include tax exemptions and low-cost financing, with no distinction made between domestic and foreign investors in most sectors.”
Site Selection’s Conway Projects Database identifies Brazil as a target for foreign investment across sectors including aerospace, automotive, machinery, life sciences, plastics, metals, electronics and energy. Projects announced over the past 12 months have come from numerous businesses based in Europe, plus others in the U.S., Japan and South Korea.
Reshoring the Auto Industry
Brazil’s large domestic market and leadership position in Mercosur, the South American trade bloc and customs union established in 1991, have helped to fashion Brazil as a prime nearshoring hub for automakers seeking proximity to North America. Stellantis, Mercedes, Honda, Hyundai, GM, Ford and Volvo are among top global OEMs with Brazilian manufacturing operations.
In April 2024, Honda announced an $807 million investment in its plant in Itirapina, outside São Paulo, meant to focus on new technologies and the development of a hybrid model for the Brazilian market. The vehicle would be able to run on ethanol, which is in vast supply in Brazil. Andre Jalonetsky, communications director for Brazil’s National Association of Motor Vehicle Manufacturers, says Brazil has also become a beneficiary of reshoring within the industry.
“For us,” Jalonetsky tells Site Selection, “it has produced some very positive effects. We are a stable democracy that’s closer to the U.S. than China. And we have a lot of experience and expertise in automotive.”
Citing “significant growth in orders from both Japanese and U.S. automobile manufacturers,” Japan’s Koito Manufacturing announced a $98 million expansion of its production facility west of São Paulo. The lighting equipment manufacturer expects to boost the plant’s capacity by 70%. Koito projects its revenue in Brazil to double by fiscal 2026.
An Emerging Hub for Novo Nordisk
During the latter part of 2024, Danish pharmaceutical giant Novo Nordisk announced two separate investments totaling $243 million in its plant in Montes Claros, the company’s largest manufacturing facility outside Denmark. An initial investment of $158 million, announced in October during a visit by Denmark’s Queen Mary, is to expand production of insulin at the company’s complex in the city of 400,000 in Minas Gerais State north of Rio de Janeiro. Inaugurated in 2007, the plant employs close to 2,000 workers and accounts for 25% of the pharma giant’s insulin output. Novo Nordisk is the world’s most prolific supplier of insulin.
In December, Novo Nordisk announced an additional investment of $85 million to construct a plant annex at Montes Claros to boost production of enzymes essential to producing Ozempic and Wegovy, the company’s wildly successful diabetes and obesity drugs. Production is to begin in 2027 and is projected to triple capacity for the enzymes enteropeptidase and ALP.
“This investment is crucial,” Novo Nordisk Vice President Reinaldo Costa said in a statement, adding that it “reaffirms our commitment to Brazil and Minas Gerais.” Novo Nordisk has also entered into a $245 million partnership with Brazil’s Elétron Energy to construct a large-scale solar farm in Minas Gerais that’s to supply 100% of the electricity needs for the Montes Claros complex.
