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Historically, FDI flows have not contributed greatly to GDP or to overall investment in the Brazilian economy. In recent years (1996-1998) there has been a significant change. It is estimated that in 1998 the ratio of FDI to GDP will reach 2.5% and that of FDI to gross fixed capital formation (GFCF) will be about 13%. These ratios are at record levels for the Brazilian economy in the recent past. They are largely due to privatizations, which accounted for 28% of Brazil¡¯s total FDI inflows in 1996 and 1998. Although the privatizations process will continue in 1999-2000 with banks owned by the states, new telecommunications concessions, oil companies (Petrobras) and others (including the privatization of the Banco do Brasil, Latin America¡¯s biggest bank), this exceptional upward trend in the FDI/GDP and FDI/GFCF ratios is likely to end at some point in the near future. During the period 1996-1998 (or 1996-1999) Brazil may be repeating the A