Abstract
We empirically investigates the factors that affect Foreign Direct Investment
(FDI) inflows in five BRICS countries for the period 1990–2015. We address the
selection bias and unobserved heterogeneity by estimating a panel Heckman selection
method and attempts to account for both selection and endogeneity within the new
two-stage method. After addressing the above mentioned econometric issues, the
infrastructure and GDP per capita variables under the new two-stage method remain
positive and significantly similar to the coefficient of infrastructure and GDP per capita
under the panel Heckman selection model. In addition, the inverse Mills ratio maintain
its level of statistical significance, confirming the presence of both sample selection
bias and endogeneity.