BRICS Countries Comparative Study On The Impact Of Foreign Direct Investment On The Economy

In recent years, the BRICS countries(Brazil, Russia, India, China and South Africa) high-speed economic development, industrialization and urbanization speeding up, the GDP growth rate is much higher than the world level, the increasing foreign investment plays an important role in the prosperity of the world economy. Especially,after the crisis, the western developed countries failed to act as engine of economy development, and its role in largely replaced by emerging market countries, BRICS countries belong to developing countries, with its vast land, abundant natural resources, labor market, broad space for development, and the advantages of the domestic government more preferential policies for foreign investors, the BRICS countries as a representative of the emerging economies attract more and more investment from the multinational companies. The BRICS countries absorb FDI accounts for high proportion of global FDI inflows, the international economic and political status is rising.In order to study the influence of foreign direct investment to the economic growth of the BRICS countries, this paper adopts the literature research and empirical research method, first of all, from the definition and formation theory of FDI and economic growth in both theory; Secondly, introducing theory and the influence mechanism of FDI on economic growth. Then from foreign capital inflows, investment sources, FDI regional distribution and preferential policies to compare the countries of FDI status; Empirical use econometric model to build simultaneous equations, using the three stage least square(3SLS) from FDI to the host country economic growth import and export, domestic investment and FDI scale of endogenous set out to analyze its impact. The results showed that the foreign direct investment to promote China’s economic growth, domestic capital formation, import and export trade; Brazil’s FDI promote economic growth, export trade, no significant impact on imports, and out of the domestic investment; India’s FDI promote economic growth, domestic investment and import trade, but no significant effect on exports. FDI into Russia promote domestic capital formation and economic growth. FDI promote the import and export trade development in South Africa, Finally, it is concluded that the BRICS as an economy must strengthen the cooperation of economy and trade, then realize the differences between complement each other, and put forward to the suggestions facing China’s utilization of foreign capital.