Impact of Macro Economic Indicators on FDI Inflows in Emerging Economies : Evidence from BRICS

This paper focuses on the macroeconomic performance of BRICS and the factors determining FDI inflows to BRICS. To understand the characteristics of FDI inflow in BRICS the paper takes FDI Inflow and Portfolio Equity as the dependent variables reflecting the FDI inflow to BRICS. The impact of nine important macroeconomic factors including GDP growth rate, GDP per capita growth rate, GNI growth rate, GNI per capita growth, Gross National Expenditure, Consumer Price Index, Inflation rate, Market capitalization of listed companies and total value of stocks traded is studied on the dependent variables. Secondary data for the period ranging from 1994 to 2011 has been used for these variables. The study uses descriptive statistics including mean, median, standard deviation, correlation, skewness and kurtosis to get insights into the data. Correlation analysis and the Ordinary Least Square method of regression is used to understand the relationship between variables. The paper finds that two common determinants of FDI inflow in India and Russia are GDP growth and GDP per capita growth. Another determining factor in case of Russia is GNI per capita (Atlas method). In case of China the determining factors are GNI-Growth and Gross National Expenditure. However, the study finds no significant factors determining FDI inflows in Brazil and South Africa