FDI Inflows in BRICS Nations and Impact of FDI in development of BRICS

2016 dissertation for MSc. International Business Management. Selected by academic staff as a good example of a masters level dissertation. Foreign Direct Investment is one of most essential economic measures that act
as an active catalyst to growth and development. Every country puts necessary
arrangement in place to attract foreign capitals. FDI does not only bring funds to
the host country, it also strengthens bilateral relationship between investor and
hosting nations. BRICS (Brazil, Russia, India, China & South Africa) had been
coined by Goldman Sachs in early 2000s as the major emerging market in the
world. BRICS nations have been developing at a very high speed since last few
decades. The countries have significant similarities in terms of geographic size,
market size and huge population. The research report aimed to evaluate FDI
inflows in each of these nations and figure out the impact regarding growth and
development. It was found out that FDI inflows in BRICS nations are too small
relating to the market size of these countries and impact negligibly in terms of
development. BRICS nations are too diversified and growth parameters are not
focused in a few number of issues.
Prior to collecting and analysing data, relevant literature had been searched and
carefully studied. Some significantly important theories of FDI have been
discussed and later compared to the strategies followed by BRICS nations. While
researching determinants of FDI, wider range of similarities were noticed among
BRICS nations in terms of market size, political stability and bureaucratic
complexities.
FDI sectors are different in each nation and they happen to attract more FDI in
the sectors the particular country has special arrangement and policy in. And
once the FDI sector is specified, it is expected attract FDI from the country which
are specialised in that sector. Fro example, South Africa attract substantial FDI in
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finance and banking sector and as the UK is the world expert in banking, it
naturally attracts the UK to be its major investor.
From historic data and recent trend, it clearly indicates that BRICS nations are in
a better position to attract FDI in a very large scale in coming years. Low cost
labour, growing economy, diversified social-economic position and globalised
trade incentives are likely to attract foreign investors in these regions.