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Determinants of FDI in BRICS Countries: Panel Data Approach

Author

Listed:
  • Biyase Mduduzi

    (University of Johannesburg, Republic of South Africa)

  • Rooderick September

    (University of Johannesburg, Republic of South Africa)

Abstract

We empirically investigates the factors that affect Foreign Direct Investment (FDI) inflows in five BRICS countries for the period 1990–2015. We address the selection bias and unobserved heterogeneity by estimating a panel Heckman selection method and attempts to account for both selection and endogeneity within the new two-stage method. After addressing the above mentioned econometric issues, the infrastructure and GDP per capita variables under the new two-stage method remain positive and significantly similar to the coefficient of infrastructure and GDP per capita under the panel Heckman selection model. In addition, the inverse Mills ratio maintain its level of statistical significance, confirming the presence of both sample selection bias and endogeneity.

Suggested Citation

  • Biyase Mduduzi & Rooderick September, 2018. "Determinants of FDI in BRICS Countries: Panel Data Approach," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 63(2), pages 35-48, August.
    • Handle: RePEc:vrs:subboe:v:63:y:2018:i:2:p:35-48:n:2
    DOI: 10.2478/subboec-2018-0007
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    References listed on IDEAS

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    More about this item

    Keywords

    endogeneity; heterogeneity; FDI; BRICS; infrastructure;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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