Does FDI foster technological innovations? Empirical evidence from BRICS economies

The idea behind the spillover effect of FDI on economic growth is based on the idea that multinational companies can bring technological innovation and rich knowledge to host countries. Therefore, FDI plays a vital role in technological innovations. This study aims to investigate the impact of forei...

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Bibliographic Details
Published in:PloS one 2023-03, Vol.18 (3), p.e0282498-e0282498
Main Authors: Ali, Najabat, Phoungthong, Khamphe, Khan, Anwar, Abbas, Shah, Dilanchiev, Azer, Tariq, Shahbaz, Sadiq, Muhammad Nauman
Format: Article
Language:English
Subjects:
Carbon Dioxide
Cross-Sectional Studies
Earth Sciences
Economic aspects
Economic Development
Economic growth
Economics
Electroconvulsive therapy
Empirical analysis
Error correction
Evaluation
Foreign investments
Impact analysis
Innovations
International business enterprises
International trade
Inventions
Investments
People and places
Physical Sciences
Product development
Productivity
R&D
Research & development
Research and Analysis Methods
Social Sciences
Technological change
Technology application
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Summary:The idea behind the spillover effect of FDI on economic growth is based on the idea that multinational companies can bring technological innovation and rich knowledge to host countries. Therefore, FDI plays a vital role in technological innovations. This study aims to investigate the impact of foreign direct investment (FDI) on the technological innovation of BRICS countries from 2000 to 2020. This study uses the latest econometric techniques, such as the cross-sectional dependence (CD) test, second-generation unit root tests, panel cointegration tests and the Dumitrescu-Hurlin causality test. For long-run run estimation, this study uses the augmented mean group (AMG) panel estimator and the common correlated effects mean group (CCEMG) estimator for empirical analysis. The findings of the study show that foreign direct investment (FDI), trade openness, economic growth, and research & development expenditure positively impact technological innovation in BRICS countries. Also, the model's long-term causality and lagged error correction term (ECT) are significantly negative. Suggested policy measures will be helpful for BRICS economies in boosting technology innovation through FDI.
ISSN:1932-6203
1932-6203
DOI:10.1371/journal.pone.0282498