THE ROLE OF FINANCIAL DEVELOPMENT IN FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH NEXUS AMONG MINTS AND BRICS

Abstract

This paper considers how the financial development’s threshold influences the direction of FDI-growth nexus (thereafter FGN) in MINTs (Mexico, Indonesia, Nigeria, Turkey) and BRICS (Brazil, Russia, India, China, South Africa) from 1980 to 2017. We used the panel threshold-ARDL (panel-TARDL) model which is estimated using the Pool Mean Group (PMG) estimator. According to the findings, the non-threshold explanatory variables: Human capital, government spending, and openness significantly influence the long-term economic growth of BRICS and MINTs. FDI inflows could have a long-run growth-enhancing effect only after exceeding the credit threshold.