Impact of export, import, and GDP on foreign direct investment of BRICS countries - A two decade tale

Abstract

In developing and emerging countries attitude towards FDI capital flows has been shifted from developed countries and have become important source for the development of the Economy. There may be several factors impacting the economic growth but this study focuses mainly on the effect of Export, Import, and GDP on Foreign Direct Investment of BRICS countries. Data is analyzed using Quarterly Data of FDI, GDP Import and Export of BRICS countries for two Decades ranging from 2000-2019. Whereas Unit Root Test, Co-integration, VECM and Granger Causality are used to achieve the objective of the study. It is interesting to note that Imports has a significant link with FDI for Brazil, Russia and South Africa. Whereas it was observed that GDP has a causal link with FDI in respect of Russia and India. The result of VECM indicated a stable long run relationship between FDI and Independent variables. The Coefficients for Brazil (-0.24), Russia (-0.15), India (-0.05), China (-0.29), South Africa (-0.11) suggest that long term deviations in FDI are being corrected by around 24 percent, 15 percent, 5 percent, 29 percent, 11 percent in Brazil, Russia, India, China, South Africa respectively.