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FDI from BRICs to LICs; Emerging Growth Driver?

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  • Montfort Mlachila
  • Misa Takebe

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.

Suggested Citation

  • Montfort Mlachila & Misa Takebe, 2011. "FDI from BRICs to LICs; Emerging Growth Driver?," IMF Working Papers 11/178, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/178
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    1. Darby, Julia & Desbordes, Rodolphe & Wooton, Ian, 2009. "Does Public Governance Always Matter? How Experience of Poor Institutional Quality Influences FDI to the South," CEPR Discussion Papers 7533, C.E.P.R. Discussion Papers.
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    7. Jing Gu, 2009. "China's Private Enterprises in Africa and the Implications for African Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 21(4), pages 570-587, September.
    8. International Monetary Fund, 2010. "FDI Flows to Low-Income Countries; Global Drivers and Growth Implications," IMF Working Papers 10/132, International Monetary Fund.
    9. 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.
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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. Yvonne Sperlich, 2015. "From power transition to economic integration theory: A review of the BRICS literature," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 15101, Institut d'Economie et Econométrie, Université de Genève.
    3. Amighini, Alessia & Sanfilippo, Marco, 2014. "Impact of South–South FDI and Trade on the Export Upgrading of African Economies," World Development, Elsevier, vol. 64(C), pages 1-17.
    4. Ndambendia, Houdou, 2015. "Africa trade and investment with BRIC nations in a changing economic landscape: the role of China," MPRA Paper 71675, University Library of Munich, Germany.
    5. del Castillo, Graciana, 2012. "Aid, Employment and Inclusive Growth in Conflict-Affected Countries: Policy Recommendations for Liberia," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
    6. repec:bla:glopol:v:7:y:2016:i:4:p:510-520 is not listed on IDEAS
    7. 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 Nanterre, EconomiX.
    8. Alessia Amighini & Chiara Franco, 2012. "Agglomeration Effects in South-South FDI," DEGIT Conference Papers c017_032, DEGIT, Dynamics, Economic Growth, and International Trade.

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