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FDI from BRICs to LICs: Emerging Growth Driver?

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  • Montfort Mlachila
  • Misa Takebe
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    Abstract

    Despite the rapid increase in FDI flows to LICs, there have been relatively few studies that have specifically examined these flows. This paper attempts to partially fill the void by throwing light on one particularly dynamic aspect of global FDI-flows from Brazil, Russia, India and China (BRICs). The paper finds that official data sources undoubtedly underestimate the volume and scope of FDI flows as many small and medium-sized enterprises (SMEs) do not always register their investment. As a result, while it is difficult to estimate accurately the growth impact of BRIC FDI, there is case study evidence that it is increasingly significant. Second, while initial investment, mostly by state-owned companies, has often been destined for natural resource industries, over time, investment has been spreading to agriculture, manufacturing, and service industries (e.g., telecommunications). Third, FDI from BRICs flows into many non resource-rich countries in LICs and plays a significant role in growth in those countries.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/178.

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    Length: 15
    Date of creation: 01 Jul 2011
    Date of revision:
    Handle: RePEc:imf:imfwpa:11/178

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    Related research

    Keywords: Foreign investment; Capital inflows; Low-income developing countries;

    This paper has been announced in the following NEP Reports:

    References

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    1. Julia Darby & Rodolphe Desbordes & Ian Wooton, 2010. "Does Public Governance always Matter? How Experience of Poor Institutional Quality Influences FDI to the South," CESifo Working Paper Series 3290, CESifo Group Munich.
    2. Anupam Basu & Krishna Srinivasan, 2002. "Foreign Direct Investment in Africa-Some Case Studies," IMF Working Papers 02/61, International Monetary Fund.
    3. International Monetary Fund, 2010. "FDI Flows to Low-Income Countries: Global Drivers and Growth Implications," IMF Working Papers 10/132, International Monetary Fund.
    4. Raphael Kaplinsky & Mike Morris, 2009. "Chinese FDI in Sub-Saharan Africa: Engaging with Large Dragons," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 551-569, September.
    5. Humphreys, David, 2008. "World Investment Report: Transnational Corporations, Extractive Industries and Development, United Nations Conference on Trade and Development (UNCTAD), Geneva, (2007). 323 pp., $90 (developed countri," Resources Policy, Elsevier, vol. 33(3), pages 175-177, September.
    6. Giles Mohan & May Tan-Mullins, 2009. "Chinese Migrants in Africa as New Agents of Development? An Analytical Framework," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 588-605, September.
    7. Peter Kragelund, 2009. "Part of the Disease Or Part of the Cure? Chinese Investments in the Zambian Mining and Construction Sectors," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 644-661, September.
    8. Jing Gu, 2009. "China's Private Enterprises in Africa and the Implications for African Development," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 570-587, September.
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    Cited by:
    1. Nicole Alice Sindzingre, 2011. "The Rise of China in Sub-Saharan Africa: its Ambiguous Economic Impacts," Post-Print halshs-00636022, HAL.
    2. Lee Robinson & Alice Nicole Sindzingre, 2012. "China’s Ambiguous Impacts on Commodity-Dependent Countries: the Example of Sub-Saharan Africa (with a Focus on Zambia)," EconomiX Working Papers 2012-39, University of Paris West - Nanterre la Défense, EconomiX.

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