What determines outward FDI in developing blocs? A new empirical comparative macroeconomic perspective of post 1990s

This study compares the relationships between important macroeconomic variables and outward foreign direct investment (OFDI) in the economies of the BRICS and N-11 countries between 1990 and 2019. The analysis employs a comprehensive econometric framework, with ordinary least squares (OLS) serving as the baseline model, followed by three-stage least squares (3SLS) to account for simultaneous relationships, and the generalized method of moments (GMM) for the robustness check to handle any endogeneity. The primary macroeconomic factors that are examined are GDP, financial development, trade openness, technological advancement, human capital, and inward foreign direct investment. The empirical results verify that, in both groups of economies, OFDI has a long-term positive and significant correlation with GDP, financial development, and trade openness. GDP is also identified as a critical outcome variable in the 3SLS model, which shows that higher GDP levels are associated with increased trade openness, financial development, and OFDI. There is conflicting evidence regarding the magnitude and statistical significance of these associations, and their direction and strength differ among models and country groups. These results demonstrate the intricate relationship between OFDI and macroeconomic factors, emphasizing the necessity of distinct policy strategies adapted to the institutional and structural realities of the N-11 and BRICS economies.