The Comparative Study Of The Relationship Between FDI And International Trade In BRICS

BRIC which derives from the English word "bric" is composed by Brazil, Russian, India and China. In2010, South Africa joined, and BRIC changed into BRICS. From then on, these five countries are known as members of BRICS.In recent years, the economic in BRICS develops rapidly. The growth rate of GDP in these five countries is much more than international level. The trade scale of these five countries is becoming larger and larger, and the inflow of FDI is increasing. Thus the BRICS play an important role in the development of word economics. In addition, the members of BRICS are all developing countries, having a large population, and the cost of labor is lower. What’s more, the demand of market is great. So these countries are the best choices for foreign investors. As these countries are developing countries, these countries’experience can be used as a reference for China. Foreign direct investment and trade are important Economic activities, and at the same time, there is an important relationship between these two activities. Therefore the main content of this research is that the comparative study of the relationship between trade and FDI in BRICS.In this paper, the methods we adapted are literature research and empirical research. Though literature research, we can understand the general situation of the inflow of FDI and trade development. Then by empirical analysis, we can understand the quantitative relationship between FDI and trade in BRICS countries.In this paper, we study the relationship between FDI and international trade in BRICS. In the first part, we review the related literature. And in the second and third part, we describe the condition of FDI and trade in BRICS. In the fourth part, by using empirical analysis, we study the relationship between FDI and trade in these five countries and draw the related conclusion. In the fifth part, according to the above result, we come up with some suggestions.Through empirical analysis, we can draw the conclusion that FDI plays a positive role in trade. However, the degree of promotion is different in these five countries. In China, foreign direct investment plays a very important role in export, while in Russian and Brazil, the influence of FDI on trade is not so obvious. In India, FDI exerts less influence on trade. However, in South Africa, FDI plays little influence on trade, and based on the results of empirical research, we can know that this relationship is unbelievable. At the same time, FDI has a positive effect on import. By empirical analysis, we know that in China and Brazil, FDI exerts an important role in import, but in Russian and India, this promotion effect is not so much. And in South Africa, this relationship is weak. Based on the result of empirical study, we can analyze the way in which FDI played on trade and come up with some corresponding measures, such as improving the investment environment, changing the direction of capital inflows, paying attention to the quality and efficiency of foreign capital, guiding the foreign investor to the Midwest region to invest, paying attention to protect domestic resources and environment, etc.So far, the study about the relationship between FDI and trade has become more and more. But most of them are focused on our own country. The innovation of this paper is that we can promote the influence of FDI on trade though comparing with other four counties.At the same time, this paper also exists some shortages. This paper studies the influence of FDI on trade, but there are no further research on the influence of FDI on trade structure. The reason is that BRICS are all developing countries, and date in these countries are difficult to find. For example, in the model of the influence of FDI to trade structure, technical progress is an very important factor, often expressed by R&D expenditure to GDP. But according to the world bank data, South Africa didn’t have the relevant statistical data until2002. Therefore, establishing the model of the influence of FDI on trade structure has some difficulties.