Comparative Study on Determinants of FDI in BRICS

Abstract

In recent years, the economy of BRICS had developed rapidly, the growth rate of GDP had exceeded the world level, the business scale had gradually extend and foreign direct investment (hereafter referred to as FDI) inflows amount has increased. The economy of BRICS played an important role in the world economy. All the BRICS nations are developing countries with a large scale of population and labor resources. They have abundant natural resources and there have a bigger demand of domestic market. Thus they are the first choice for foreign direct investment. The paper uses empirical research method, employs panel data to analyze the effected factors of FDI inflows of BRICS countries from the period 1996 to 2013 and make comparison of five BRICS countries. The results indicate that there is a positive effect on market scale of FDI inflows of BRICS countries towards to the whole BRICS; the exchange rate have a negative effect on FDI of BRICS; the infrastructure construction have no effect on FDI inflows of BRICS countries. Separately for five BRICS countries, FDI inflows of Brazil, Russia, India, South Africa and China are positively affected by each country's national market scale; the exchange rate of Russia make a negative effect on FDI; the infrastructure construction of India have a negative effect on FDI and the infrastructure construction of South Africa have a positive effect on FDI.