FDI Inflow in BRICS and G7: An Empirical Analysis

Abstract

A change in FDI inflow is noticed across the globe. G-7 economies, as representative of developed economies, are fronting with a sharp decline in foreign direct investment inflows in the entire world's FDI inflow, while BRICS, a representative of developing economies, is getting more of the world as a whole's FDI inflow. FDI is a significant economic development variable that has substantially impacted the economic growth of economies. Past trends of FDI inflow into BRICS and G-7 economies showed that BRICS economies had noticed a higher compounded average annual growth rate in FDI compared to G-7 economies in the preceding periods. The best-suited ARIMA model's anticipated value of FDI inflow shows an increasing trend in BRICS and a steady and dropping trend in the G-7. Comparative results of the predicted values of FDI inflow showed that BRICS would have positive FDI inflow while the G-7 would follow a declining trend. The study's findings shall help foreign investors identify the investment opportunities and their future course of action in selecting an investment destination.