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Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT

Author

Listed:
  • Akpan Uduak

    (SPIDER Solutions, Nigeria)

  • Isihak Salisu

    (SPIDER Solutions, Nigeria)

  • Asongu Simplice

    (Yaoundé/Cameroun)

Abstract

This study employs panel analysis to examine the determinants of foreign direct investment (FDI) in Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) using data for eleven years i.e. 2001 – 2011. First, it uses pooled time-series cross sectional analysis to estimate the model on determinants of FDI for three samples: BRICS only, MINT only, and BRICS and MINT combined; then, random effects model is also employed to estimate the model for BRICS and MINT combined. The results show that market size, infrastructure availability, and trade openness play the most significant roles in attracting FDI to BRICS and MINT while the roles of availability of natural resources and institutional quality are insignificant. Given that FDI inflow to a country has the potential of being mutually beneficial to the investing entity and host government, the challenge is on how BRICS and MINT can sustain the level of FDI inflow and ensure it results in economic growth and socio-economic transformation. To sustain the level of FDI inflow, governments of BRICS and MINT need to ensure that their countries remain attractive for investment. BRICS and MINT also need to ensure that their economies absorb substantial skills and technology spillovers from FDI inflow to promote sustainable long-term economic growth by investing more in their human capital. The study is significant because it contributes to literature on determinants of FDI by extending the scope of previous studies which often focus only on BRICS.

Suggested Citation

  • Akpan Uduak & Isihak Salisu & Asongu Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," Working Papers of the African Governance and Development Institute. 14/002, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:14/002
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    Cited by:

    1. Simplice Anutechia Asongu & Christian Lambert Nguena, 2014. "Equitable and sustainable development of foreign land acquisitions: Lessons, Policies and Implications," AAYE Policy Research Working Paper Series 14_013, Association of African Young Economists, revised Aug 2014.
    2. Simplice A. Asongu, 2018. "Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(1), pages 81-135, March.
    3. Asongu, Simplice & Batuo, Enowbi & Tchamyou, Vanessa, 2015. "Bundling Governance: Finance versus Institutions in Private Investment Promotion," MPRA Paper 71170, University Library of Munich, Germany.
    4. Simplice A. ASONGU & Jacinta NWACHUKWU & Nicholas BIEKPE, 2019. "Foreign Aid, Terrorism And Growth: Conditional Evidence From Quantile Regression," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(3), pages 457-486, September.
    5. Nicolas Papadopoulos & Yara Ibrahim & Alessandro De Nisco & Maria Rosaria Napolitano, 2018. "The Role of Country Branding in Attracting Foreign Investment: Country Characteristics and Country Image," MERCATI E COMPETITIVIT, FrancoAngeli Editore, vol. 2018(2), pages 85-108.
    6. Simplice A. Asongu & Uchenna R. Efobi & Ibukun Beecroft, 2017. "Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy," Research Africa Network Working Papers 17/061, Research Africa Network (RAN).
    7. Simplice A. Asongu & Uchenna R. Efobi & Ibukun Beecroft, 2015. "FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries," Research Africa Network Working Papers 15/019, Research Africa Network (RAN).
    8. Simplice A. Asongu & Jacinta C. Nwachukwu & Aqsa Aziz, 2018. "Determinants of Mobile Phone Penetration: Panel Threshold Evidence from Sub-Saharan Africa," Journal of Global Information Technology Management, Taylor & Francis Journals, vol. 21(2), pages 81-110, April.
    9. ASONGU, Simplice & ODHIAMBO, Nicholas, 2018. "Drivers Of Growth In Fast Emerging Economies: A Dynamic Instrumental Quantile Approach To Real Output And Its Rates Of Growth In Brics And Mint Countries, 2001-2011," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 18(1), pages 5-22.
    10. Delbianco, Fernando & Fioriti, Andrés, 2018. "External cycles and commodities in Latin America and the Caribbean: a cointegration analysis with breaks," Revista Lecturas de Economía, Universidad de Antioquia - CIE, issue 88, pages 51-76, January.
    11. Asongu, Simplice & Nwachukwu, Jacinta, 2015. "Drivers of FDI in Fast Growing Developing Countries: Evidence from Bundling and Unbundling Governance," MPRA Paper 67294, University Library of Munich, Germany.
    12. Asongu, Simplice, 2019. "FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance," MPRA Paper 101557, University Library of Munich, Germany.
    13. Simplice A. Asongu, 2015. "Drivers of Growth in Fast Emerging Economies: A Dynamic Instrumental Quantile Approach," Research Africa Network Working Papers 15/009, Research Africa Network (RAN).
    14. Akinola Ezekiel Morakinyo & Mabutho Sibanda, 2016. "The Determinants of Non-Performing Loans in the MINT Economies," Journal of Economics and Behavioral Studies, AMH International, vol. 8(5), pages 39-55.
    15. Muhammad Shahbaz & Miroslav Mateev & Salah Abosedra & Muhammad Ali Nasir & Zhilun Jiao, 2021. "Determinants of FDI in France: Role of transport infrastructure, education, financial development and energy consumption," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1351-1374, January.
    16. Asongu, Simplice, 2015. "Determinants of Growth in Fast Developing Countries: Evidence from Bundling and Unbundling Institutions," MPRA Paper 67310, University Library of Munich, Germany.
    17. Simplice A. Asongu & Oasis Kodila-Tedika, 2015. "Conditional determinants of FDI in fast emerging economies: an instrumental quantile regression approach," Research Africa Network Working Papers 15/003, Research Africa Network (RAN).
    18. Fernando Delbianco & Andrés Fioriti, 2018. "External cycles and commodities in Latin America and the Caribbean: a cointegration analysis with breaks," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 88, pages 51-76, Enero - J.
    19. Chia-Nan Wang & Anh Phuong Le, 2019. "Application of Multi-Criteria Decision-Making Model and GM (1,1) Theory for Evaluating Efficiency of FDI on Economic Growth: A Case Study in Developing Countries," Sustainability, MDPI, Open Access Journal, vol. 11(8), pages 1-29, April.
    20. Suborna Barua & Junnatun Naym & Hazera-Tun-Nessa, 2017. "Economic Climate, Infrastructure and FDI: Global Evidence with New Dimensions," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 16(1), pages 31-48, June.
    21. Asongu, Simplice & Nguena, Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," MPRA Paper 56808, University Library of Munich, Germany.
    22. Tafadzwa Matiza & Sandra Perks, 2017. "Human Capital Reputation as an Antecedent of Foreign Direct Investment Market Entry in Zimbabwe," Journal of Economics and Behavioral Studies, AMH International, vol. 9(5), pages 185-199.

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    More about this item

    Keywords

    FDI; determinants; fast-growing economies; BRICS; MINT;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • F0 - International Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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