Abstract
Purpose – This study aims to assess the impact of foreign direct investment (FDI) on growth in presence of host country characteristics, namely, economic stability, human capital, financial development and trade openness, in the fastest emerging Brazil, Russia, India, China, South Africa (BRICS) economies, considered to be significant FDI destinations. Design/methodology/approach – The panel data for the variables under study, collected from World Investment Reports published by World Bank, are analyzed using feasible generalized least squares method to examine the relationship between the dependent and explanatory variables over the period 1987–2018. The interaction effect has been studied to examine the growth impact of FDI in presence of host country characteristics. Findings – The findings revealed that FDI does not exert a significant impact on the economic growth of BRICS individually but has a significant growth impact only in presence of host country characteristics. FDI on interacting with financial development, trade openness and human capital exerts a positive impact on the economic growth of BRICS economies, and on interacting with economic instability (inflation), FDI has a negative impact on growth. Practical implications – The study has implications for policy makers of BRICS countries who are suggested to work toward the development of financial markets, trade liberalization and human capital development to realize the positive growth impact of FDI. Originality/value – Very few studies have been conducted to examine the growth effect of FDI in BRICS economies, which are considered to be the fastest-growing economies and dominant players in the global investment landscape. Assessing the interaction of FDI with absorptive capacities/host country characteristics to study its growth impact in BRICS using long data and robust panel data methodology is an original contribution of this paper toward the existing body of knowledge.
Keywords
FDI, Economic growth, GDP, Host country characteristics, Panel data
Publisher
Kinh Tế Quốc Dân???dc.relation.reference???
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Abbas, Q. and Mujahid-Mukhtar, E. (2001), “The role of human capital in economic growth: a comparative study of Pakistan and India”, The Pakistan Development Review, Vol. 39 No. 4, pp. 451-473. FDI,host country characteristics and economic growth 257Abdelmalki, L., Gbakou, M.P.B., Jallab, M.S. and Sandretto, R. (2012), “Does macroeconomic stability condition the impact of FDI on economic growth and emergence? an empirical study of countries in Africa, Latin America, the Caribbean and Asia”, Developing Worlds, Vol. 2 No. 158, pp. 101-114. Agrawal, G. (2015), “Foreign ...See More
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