Does FDI Stimulate GDP Growth? Evidence from the Middle Eastern and BRICS Countries

This research aims to evaluate the impact of inward FDI on GDP in the Middle Eastern (ME) and BRICS countries. The research focuses on 19 countries across 4 continents: Asia, Europe, Africa, and South America. To detect the existence of the causal relationship between the inward FDI and GDP, the authors relied on contemporary standard tools, such as the Engle–Granger test, Johansen cointegration methodology, Heteroskedasticity test (Harvey), and others. The research finds no dynamic causal relationship between inward FDI and GDP in the short or long term. In other words, inward FDI in ME and BRICS countries does not contribute to GDP growth, except in Brazil and India. This research does establish a short-term, unidirectional causal relationship where FDI influences GDP. Specifically, it shows a positive causal relationship for Brazil and a negative one for India.