Does Foreign Direct Investment Facilitate Entrepreneurial Activities? Evidence from BRICS Countries

Abstract

This article investigates the impact of foreign direct investment (FDI) on the entrepreneurial activities in Brazil, Russia, India, China and South Africa (BRICS nations) by assessing the influence of both inward and outward FDI during the period of 2002–2019. We resort to a fixed as well as random effect model on the panel data of five nations, that is BRICS. The article also explored the reverse impact of total entrepreneurial activities (TEA) on inward and outward FDI. The results highlight that inward FDI has a positive impact on entrepreneurial activities while outward FDI has a negative influence on entrepreneurial activities in BRICS nations. Nevertheless, the TEA have a positive and significant impact on inward FDI, while relationships between outward FDI and TEA are found to be insignificant in BRICS economies. In addition, economic growth is also found to be important factor to encourage FDI. The results suggest that more inward FDI should be encouraged to provide innovation and markets to entrepreneurs, as they are the bridge between invention and commercialization.