Determinants of Foreign Direct Investment Inflows to the Industrial Sector in BRICS+-T Countries
1Ertuğrul YAŞAR*, Adem TÜRKMEN**
PhD(c), Department of Economics and Administrative Sciences, Erzurum
Technical University, Türkiye, This email address is being protected from spambots. You need JavaScript enabled to view it. , ORCID: 0000-0002-1009-0439*
Associate Professor, Department of Economics and Administrative Sciences,
Erzurum Technical University, Türkiye, This email address is being protected from spambots. You need JavaScript enabled to view it.,
ORCID: 0000-0002-1534-2332**
Abstract: Foreign Direct Investment (FDI), frequently used in international relations, can remain in a country or enter and exit countries under the influence of social, political, economic, and sociological factors. In the context of this study, the aim is to analyse the factors determining foreign direct investment (FDI) inflows into the industrial sector in BRICS (pre-expansion), BRICS+ (post-expansion), and BRICS+-T (including Türkiye) countries. In three models, the dependent variable is the amount of FDI entering the industrial sector of BRICS+-T countries between 2010 and 2022. The independent variables are labour costs, GDP, real effective exchange rate (REER), economic policy uncertainty, trade openness, and raw material and natural resource revenues. According to the findings, before the expansion, there was a negative and significant relationship between FDI inflows and trade openness in the BRICS countries, while there was a positive and significant relationship with raw material and natural resource revenues. After the expansion, FDI inflows were found to have a negative and significant relationship with REER and trade openness, while a positive and significant relationship was observed with GDP. After expansion, in BRICS+-T countries, there is a significant and negative relationship between FDI inflows and labour costs, trade openness, and the real effective exchange rate, while there is a significant and positive relationship with GDP. The study shows that GDP is the most dominant determinant of FDI. Additionally, economic expansion and open trade policies play a significant role in FDI flows. Therefore, Türkiye's participation in the BRICS group means the addition of a new market with high potential for attracting FDI, thus increasing the group's attractiveness.
Keywords: BRICS, Foreign Direct Investment, Determinants, Panel Data Analysis.
