| Along with economic globalization, the BRICs has become an important power for world economic growth. Four countries’ rapid economic growth cannot be separated from the opening-up strategy and active use of foreign capital. On one hand the four countries attract FDI, expect to form domestic investment and beneficial spillovers to domestic enterprises in order to promote economic growth, and on the other hand FDI actually effects domestic investment and independent innovation ability both positively and negatively. Existing study on FDI which promotes economic growth is based on either a country or a particular type of countries, and no detailed comparison of these four countries with similar opening-up background and different model of development has taken place. Finding the common ground through the four countries’ different models of promoting economic growth by using FDI and the reasons for the differences can reveal the process how FDI promoting economic growth. All the above jobs are very important not only for the BRICs, but also for the theoretical study on the FDI promoting economic growth. Especially since the subprime crisis, European and American developed countries as the world’s main supply countries of FDI take a severe economic downturn, how to use FDI selectively while the supply of FDI is reduced and the competition is increased, in order to promote the positive effects of FDI and limit the negative effect of the range is of great practical significance with no doubt.Firstly, to demonstrate the impact of FDI on economic growth rigorously, this paper add an important control variable factors to Agoison’s (2000) theoretical model of capital squeezing, in order to study FDI’s effects on the host countries’ capital under conditions of economic globalization. We found that capital effect of the FDI is uncertain. It depends on combined effects of the industry and the model FDI enters. Subsequently, integration and development studies were taken on Borensztein’s (1998) technology spillover model and Datta’s (2006) Imitation and Innovation model of technology, and a model to illustrate the two technological progress and economic growth in the host country relations was constructed. Research shows that FDI promotes the host countres’economic growth through technology spillovers, technology innovations and institution-building effects.Secondly, after the theoretical study, with the use of four countries’data in the 1992-2009, the paper took an empirical study with Cross-section SUR and OLS panel data test and Granger causality test on the four countries’direct capital effects, indirect effects of capital, technology spillovers, technology innovation and institution-building effect of FDI. The results showed that, FDI produced a significant crowding out of capital, technology spillovers, technology innovation and institution-building effects to the four countries. When taking into account of the exchange rate and degree of open-up, the crowding-out effect was minimum. However, tests between independent countries were very different; there may even be an opposite direction of the conclusions, especially when taking into account of the absorption capacity. When all the countries’FDI have had a crowding-out effect for domestic capital, the empirical results show that FDI in China had a significant effect called capital squeeze. When taking into account of the amount of labor, Russia has the biggest crowding out effect, actually will have a squeeze effect, though not obvious in the long term. FDI technology spillovers caused significantly raising of the level of economic growth, but taking into account of the absorption capacity of different factors, the degree of technology spillovers are very different. When making concrete to each country, the spillover effects of Russia is largest, followed by China, India and Brazil, where the role of human capital is the maximum absorption capacity variable. And when measuring the absorptive capacity with openness and domestic R& D, four countries’R&D are still inadequate compared to their economical scale, so the technology spillover effects are suppressed. As the single factor for the BRICs, the most important to technological innovation is the human capital, the next is the domestic research and development and the overflow technological innovation from FDI. But simultaneously put the three variables into equation to regress, the technological innovation effect of FDI is negative. When considering the degree of openness as absorbency, the technological innovation effect of FDI is positive, the same as technical overflow effect, which shows the importance of opening degree to the host country’s technological innovation. The system factor measured by marketability has limited the function of human capital, which explains the importance of system factor. As a single factor, the FDI transmission’s technological innovation effect of China is the biggest, India’s is the next, but produced serious crowding-out effect in Russia, which also produced a crowding-out effect in Brazil and the degree is relatively smaller. But when doing a overall evaluation including human capital and domestic research and development, only India’s FDI technological innovation effect is positive, China’s FDI also produced a crowding-out effect to the domestic innovation. The main reason is the disposition of human capital between technical imitation and technological innovation. When we select the degree of development and market indicators as a measure, FDI significantly promotes the construction of the system of the BRICs, and between the two indicators of the system there are mutually reinforcing effects. Difference is that the time the four countries conduct the effects varies due to different basis. As the single factor for the BRICs, the most important to technological innovation is the human capital, the next is the domestic research and development and the overflow technological innovation from FDI. But simultaneously put the three variables into equation to regress, the technological innovation effect of FDI is negative. When considering the degree of openness as absorbency, the technological innovation effect of FDI is positive, the same as technical overflow effect, which shows the importance of opening degree to the host country’s technological innovation. The system factor measured by marketability has limited the function of human capital, which explains the importance of system factor. As a single factor, the FDI transmission’s technological innovation effect of China is the biggest, India’s is the next, but produced serious crowding-out effect in Russia, which also produced a crowding-out effect in Brazil and the degree is relatively smaller. But when doing a overall evaluation including human capital and domestic research and development, only India’s FDI technological innovation effect is positive, China’s FDI also produced a crowding-out effect to the domestic innovation. The main reason is the disposition of human capital between technical imitation and technological innovation. But in general, we can see that institutional factors such as the level of the host country’s human capital, domestic R & D investment, openness and marketability degree have a decisive role for the various effects of FDI on economic growth.Finally, we make the summary upon previous research. We believe that as the emerging host countries, how the BRICs attract foreign investment on the basic of self-absorption ability becomes a key advantage of using FDI. In order to strengthen the four countries’promoting effect of FDI on economic growth, we propose that the four countries continue to expand the opening up selectively, raise the level of R & D investment and increase domestic spending on education, continue to implement the construction of the market, maintain a reasonable reliance on foreign capital.
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