ABSTRACT
The BRICS (Brazil, Russia, India, China and South Africa) group comprises economically diverse countries with significant potential for economic growth. FDI inflows, perceived to be a forerunner for economic growth, have registered a stupendous increase in BRICS economies relative to the rest of the world. Accordingly, the key determinants of FDI require careful analysis to design future economic policies. This paper examines the important contributing factors to FDI inflows towards BRICS countries, using a fixed effect panel data model for the period from 1996 to 2016. The analysis finds that the market size (measured in terms of final consumption expenditure (FCE) as a percentage of the GDP), macro-economic stability (measured in terms of the inflation rate), interest rate, availability of natural resources, and availability of labour turn out to be the main determinants of FDI inflows into the BRICS group. A positive and significant coefficient of FCE indicates the market-seeking behaviour of FDI, while a positive significant coefficient of availability of labour suggests the labour exploiting nature of FDI. Further, a positive and significant coefficient of the availability of natural resources in the host countries points towards the resource-seeking tendencies of multi-national corporations (MNCs).
