Understanding the Relationship Between Foreign Direct Investment and Economic Growth in BRICS: Panel ARDL Approach

Foreign direct investment (FDI) has gained prominence in international economics over the past three decades. Primarily, belief that FDI influences economic growth of host country, set stage for empirical research focused on FDI–growth nexus. The literature, however, reveals mixed evidence regarding role promoting growth. Despite conflicting evidence, developed and developing economies have attached immense political importance to FDI. It is noteworthy BRICS (Brazil, Russia, India, China South Africa) are representative emerged as significant destinations, having witnessed an surge inward few against this backdrop present study attempts assess impact inflows select macroeconomic variables, namely stability, human capital, financial development trade openness (TO), economies. examines both short-run long-run relationships between inflows, variables by employing dynamic panel autoregressive distributed lag (ARDL) model, unlike most previous studies. For study, secondary data covering a reference period 32 years (1987–2018) were used. GDP (GDPG), inflation (INF), private sector bank credit (proxy development) TO been collected from World Investment Reports published annually United Nations Conference Trade Development (UNCTAD) Bank (World Indicators). findings revealed cointegration among FDI, country characteristics (TO, stability) BRICS.