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Corresponding Author:
Thobekile Qabhobho, Department of Economics and Economic History, Faculty of Business and Economic Sciences, Nelson Mandela University, Gqeberha, South Africa

Clement Moyo, Department of Economics, Nelson Mandela University, South Africa
Kunofiwa Tsaurai, Department of Finance, Risk Management and Banking, University of South Africa

Complementarity or Substitutability between Outward FDI and Exporting in Influencing Economic Growth: The BRICS Countries Analysis

Volume 76 - Issue 2, May 2023
(pp. 275-296)
JEL classification: C01; C23; F21; F23
Keywords: Complementarity; Substitutability; Outward FDI; Exports; Economic Growth; BRICS


The rise in outward foreign direct investment (OFDI) from developing countries has reignited the debates on its impact on domestic economies. However, there is lack of consensus on the complementary role of OFDI and exports in influencing economic growth. This article investigates whether OFDI and exports have a complementary relationship in affecting economic growth in the BRICS group of countries. For this purpose, the Pooled Mean Group (PMG) ARDL model – as developed by Pesaran et al. (1999) has been used to estimate the long-run and short-run relationship between the variables. The findings show that OFDI negatively affects economic growth, while exports positively impact economic growth in BRICS countries. Furthermore, the results also indicate that there is a complementarity relationship between OFDI and exports that promotes economic growth as indicated by a positive and significant interaction term between the variables. Policy implications and recommendations are outlined.

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Institute for International Economics
of the Genoa Chamber of Commerce

Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)