Comparison between Foreign Direct Investment and Russian Sanctions on BRICS Exports and Imports

The objective of this research is to examine and compare the effects of foreign direct investment (FDI) and Russian sanctions on the exports and imports of the BRICS group. For this purpose, using quarterly data from 2010 to 2023, the impact of the selected variables on the total exports and imports of the BRICS countries was estimated through the generalized method of moments (GMM) approach. The results of the study indicated that the trade condition variable in the previous period, which includes the total exports and imports, has a positive and significant effect on the dependent variable in the current period. Furthermore, based on the model estimation, the effective exchange rate variable exerts a positive and significant impact on trade conditions. The investment variable has a negative and significant effect on the dependent variable. The net export variable, defined as the difference between exports and imports of BRICS countries, has a positive and significant impact on the trade condition variable. The sanction variable, which in this study refers to the comprehensive sanctions imposed against Russia, shows that during the period 2014–2020 the sanctions had a negative and significant effect, whereas in the period 2021–2023 this negative effect became insignificant. Considering the results of the study, it can be concluded that the sanction variable had a more negative impact on the trade conditions of BRICS member countries compared to foreign direct investment. However, during the period in which Russia managed to overcome the sanctions, the negative effect of sanctions became insignificant.