example of literature review ap research

Have a language expert improve your writing

Run a free plagiarism check in 10 minutes, generate accurate citations for free.

• Knowledge Base

Methodology

• How to Write a Literature Review | Guide, Examples, & Templates

How to Write a Literature Review | Guide, Examples, & Templates

Published on January 2, 2023 by Shona McCombes . Revised on September 11, 2023.

What is a literature review? A literature review is a survey of scholarly sources on a specific topic. It provides an overview of current knowledge, allowing you to identify relevant theories, methods, and gaps in the existing research that you can later apply to your paper, thesis, or dissertation topic .

There are five key steps to writing a literature review:

• Search for relevant literature
• Evaluate sources
• Identify themes, debates, and gaps
• Outline the structure
• Write your literature review

A good literature review doesn’t just summarize sources—it analyzes, synthesizes , and critically evaluates to give a clear picture of the state of knowledge on the subject.

Instantly correct all language mistakes in your text

Upload your document to correct all your mistakes in minutes

Table of contents

What is the purpose of a literature review, examples of literature reviews, step 1 – search for relevant literature, step 2 – evaluate and select sources, step 3 – identify themes, debates, and gaps, step 4 – outline your literature review’s structure, step 5 – write your literature review, free lecture slides, other interesting articles, frequently asked questions, introduction.

• Quick Run-through
• Step 1 & 2

When you write a thesis , dissertation , or research paper , you will likely have to conduct a literature review to situate your research within existing knowledge. The literature review gives you a chance to:

• Demonstrate your familiarity with the topic and its scholarly context
• Develop a theoretical framework and methodology for your research
• Position your work in relation to other researchers and theorists
• Show how your research addresses a gap or contributes to a debate
• Evaluate the current state of research and demonstrate your knowledge of the scholarly debates around your topic.

Writing literature reviews is a particularly important skill if you want to apply for graduate school or pursue a career in research. We’ve written a step-by-step guide that you can follow below.

Receive feedback on language, structure, and formatting

Professional editors proofread and edit your paper by focusing on:

• Academic style
• Vague sentences
• Style consistency

See an example

Writing literature reviews can be quite challenging! A good starting point could be to look at some examples, depending on what kind of literature review you’d like to write.

• Example literature review #1: “Why Do People Migrate? A Review of the Theoretical Literature” ( Theoretical literature review about the development of economic migration theory from the 1950s to today.)
• Example literature review #2: “Literature review as a research methodology: An overview and guidelines” ( Methodological literature review about interdisciplinary knowledge acquisition and production.)
• Example literature review #3: “The Use of Technology in English Language Learning: A Literature Review” ( Thematic literature review about the effects of technology on language acquisition.)
• Example literature review #4: “Learners’ Listening Comprehension Difficulties in English Language Learning: A Literature Review” ( Chronological literature review about how the concept of listening skills has changed over time.)

You can also check out our templates with literature review examples and sample outlines at the links below.

Download Word doc Download Google doc

Before you begin searching for literature, you need a clearly defined topic .

If you are writing the literature review section of a dissertation or research paper, you will search for literature related to your research problem and questions .

Make a list of keywords

Start by creating a list of keywords related to your research question. Include each of the key concepts or variables you’re interested in, and list any synonyms and related terms. You can add to this list as you discover new keywords in the process of your literature search.

• Social media, Facebook, Instagram, Twitter, Snapchat, TikTok
• Body image, self-perception, self-esteem, mental health
• Generation Z, teenagers, adolescents, youth

Search for relevant sources

Use your keywords to begin searching for sources. Some useful databases to search for journals and articles include:

• Your university’s library catalogue
• Google Scholar
• Project Muse (humanities and social sciences)
• Medline (life sciences and biomedicine)
• EconLit (economics)
• Inspec (physics, engineering and computer science)

You can also use boolean operators to help narrow down your search.

Make sure to read the abstract to find out whether an article is relevant to your question. When you find a useful book or article, you can check the bibliography to find other relevant sources.

You likely won’t be able to read absolutely everything that has been written on your topic, so it will be necessary to evaluate which sources are most relevant to your research question.

For each publication, ask yourself:

• What question or problem is the author addressing?
• What are the key concepts and how are they defined?
• What are the key theories, models, and methods?
• Does the research use established frameworks or take an innovative approach?
• What are the results and conclusions of the study?
• How does the publication relate to other literature in the field? Does it confirm, add to, or challenge established knowledge?
• What are the strengths and weaknesses of the research?

Make sure the sources you use are credible , and make sure you read any landmark studies and major theories in your field of research.

You can use our template to summarize and evaluate sources you’re thinking about using. Click on either button below to download.

Take notes and cite your sources

As you read, you should also begin the writing process. Take notes that you can later incorporate into the text of your literature review.

It is important to keep track of your sources with citations to avoid plagiarism . It can be helpful to make an annotated bibliography , where you compile full citation information and write a paragraph of summary and analysis for each source. This helps you remember what you read and saves time later in the process.

Don't submit your assignments before you do this

The academic proofreading tool has been trained on 1000s of academic texts. Making it the most accurate and reliable proofreading tool for students. Free citation check included.

Try for free

To begin organizing your literature review’s argument and structure, be sure you understand the connections and relationships between the sources you’ve read. Based on your reading and notes, you can look for:

• Trends and patterns (in theory, method or results): do certain approaches become more or less popular over time?
• Themes: what questions or concepts recur across the literature?
• Debates, conflicts and contradictions: where do sources disagree?
• Pivotal publications: are there any influential theories or studies that changed the direction of the field?
• Gaps: what is missing from the literature? Are there weaknesses that need to be addressed?

This step will help you work out the structure of your literature review and (if applicable) show how your own research will contribute to existing knowledge.

• Most research has focused on young women.
• There is an increasing interest in the visual aspects of social media.
• But there is still a lack of robust research on highly visual platforms like Instagram and Snapchat—this is a gap that you could address in your own research.

There are various approaches to organizing the body of a literature review. Depending on the length of your literature review, you can combine several of these strategies (for example, your overall structure might be thematic, but each theme is discussed chronologically).

Chronological

The simplest approach is to trace the development of the topic over time. However, if you choose this strategy, be careful to avoid simply listing and summarizing sources in order.

Try to analyze patterns, turning points and key debates that have shaped the direction of the field. Give your interpretation of how and why certain developments occurred.

If you have found some recurring central themes, you can organize your literature review into subsections that address different aspects of the topic.

For example, if you are reviewing literature about inequalities in migrant health outcomes, key themes might include healthcare policy, language barriers, cultural attitudes, legal status, and economic access.

Methodological

If you draw your sources from different disciplines or fields that use a variety of research methods , you might want to compare the results and conclusions that emerge from different approaches. For example:

• Look at what results have emerged in qualitative versus quantitative research
• Discuss how the topic has been approached by empirical versus theoretical scholarship
• Divide the literature into sociological, historical, and cultural sources

Theoretical

A literature review is often the foundation for a theoretical framework . You can use it to discuss various theories, models, and definitions of key concepts.

You might argue for the relevance of a specific theoretical approach, or combine various theoretical concepts to create a framework for your research.

Like any other academic text , your literature review should have an introduction , a main body, and a conclusion . What you include in each depends on the objective of your literature review.

The introduction should clearly establish the focus and purpose of the literature review.

Depending on the length of your literature review, you might want to divide the body into subsections. You can use a subheading for each theme, time period, or methodological approach.

As you write, you can follow these tips:

• Summarize and synthesize: give an overview of the main points of each source and combine them into a coherent whole
• Analyze and interpret: don’t just paraphrase other researchers — add your own interpretations where possible, discussing the significance of findings in relation to the literature as a whole
• Critically evaluate: mention the strengths and weaknesses of your sources
• Write in well-structured paragraphs: use transition words and topic sentences to draw connections, comparisons and contrasts

In the conclusion, you should summarize the key findings you have taken from the literature and emphasize their significance.

When you’ve finished writing and revising your literature review, don’t forget to proofread thoroughly before submitting. Not a language expert? Check out Scribbr’s professional proofreading services !

This article has been adapted into lecture slides that you can use to teach your students about writing a literature review.

Scribbr slides are free to use, customize, and distribute for educational purposes.

Open Google Slides Download PowerPoint

If you want to know more about the research process , methodology , research bias , or statistics , make sure to check out some of our other articles with explanations and examples.

• Sampling methods
• Simple random sampling
• Stratified sampling
• Cluster sampling
• Likert scales
• Reproducibility

 Statistics

• Null hypothesis
• Statistical power
• Probability distribution
• Effect size
• Poisson distribution

Research bias

• Optimism bias
• Cognitive bias
• Implicit bias
• Hawthorne effect
• Anchoring bias
• Explicit bias

A literature review is a survey of scholarly sources (such as books, journal articles, and theses) related to a specific topic or research question .

It is often written as part of a thesis, dissertation , or research paper , in order to situate your work in relation to existing knowledge.

There are several reasons to conduct a literature review at the beginning of a research project:

• To familiarize yourself with the current state of knowledge on your topic
• To ensure that you’re not just repeating what others have already done
• To identify gaps in knowledge and unresolved problems that your research can address
• To develop your theoretical framework and methodology
• To provide an overview of the key findings and debates on the topic

Writing the literature review shows your reader how your work relates to existing research and what new insights it will contribute.

The literature review usually comes near the beginning of your thesis or dissertation . After the introduction , it grounds your research in a scholarly field and leads directly to your theoretical framework or methodology .

A literature review is a survey of credible sources on a topic, often used in dissertations , theses, and research papers . Literature reviews give an overview of knowledge on a subject, helping you identify relevant theories and methods, as well as gaps in existing research. Literature reviews are set up similarly to other  academic texts , with an introduction , a main body, and a conclusion .

An  annotated bibliography is a list of  source references that has a short description (called an annotation ) for each of the sources. It is often assigned as part of the research process for a  paper .  

Cite this Scribbr article

If you want to cite this source, you can copy and paste the citation or click the “Cite this Scribbr article” button to automatically add the citation to our free Citation Generator.

McCombes, S. (2023, September 11). How to Write a Literature Review | Guide, Examples, & Templates. Scribbr. Retrieved September 3, 2024, from https://www.scribbr.com/dissertation/literature-review/

Is this article helpful?

Shona McCombes

Other students also liked, what is a theoretical framework | guide to organizing, what is a research methodology | steps & tips, how to write a research proposal | examples & templates, "i thought ai proofreading was useless but..".

I've been using Scribbr for years now and I know it's a service that won't disappoint. It does a good job spotting mistakes”

AP Research

Learn all about the course and assessment. Already enrolled? Join your class in My AP.

Not a Student?

Go to AP Central for resources for teachers, administrators, and coordinators.

About the Assessment

There is no end-of-course written exam for AP Research. Instead, you’ll be assessed on performance tasks you complete that are based on your yearlong research project: an academic paper (which you’ll submit online for scoring through the AP Digital Portfolio), a presentation, and an oral defense of your research. These components all contribute to your final AP score on a scale of 1–5.

Updates to AP Research Performance Task

Given the implications of ChatGPT and other similar generative artificial intelligence (AI) tools on the AP Research performance task components, we’ve updated the guidance  regarding the use of these tools. These guidelines require your teacher to attest to the authenticity of your work in order for you to receive a score on the associated performance task. Review the  AP Research Course and Exam Description for the full policy and details.

Assessment Date

Wed, Apr 30, 2025

11:59 PM ET

AP Research Performance Task Due Date

Submit your AP Research performance task as final in the AP Digital Portfolio by this date.

Assessment Components

Academic paper.

75% of Score

The academic paper should be 4,000–5,000 words long. You’ll be evaluated on the content, structure, format, and conclusions of the paper as well as your ability to properly and accurately cite sources.

Presentation and Oral Defense

25% of Score

The culminating event of the AP Research course will be a presentation of your research question, research methodology, and findings, including an oral defense that addresses a set of questions about your research inquiry. The presentation and defense take 15–20 minutes. You will also be required to answer 3–4 questions from a panel of trained evaluators and your AP Research teacher.

• AP Research teachers use a scoring rubric designed by the AP Program.
• AP Research teachers also take part in mandatory training from the AP Program in how to score these components.

How We Score Your Work

Teacher Scored Components

Your in-class presentation and oral defense is scored by your AP Research teacher.

Here’s how we make sure that scoring by AP Research teachers is standardized:

College Board Scored Components

After you submit your academic paper online through the AP Digital Portfolio, it is scored by trained, experienced educators called AP readers.

Assessment Essentials

Assessment preparation, ap daily videos.

Once you join your AP class section online, you’ll be able to access AP Daily videos in AP Classroom. AP Daily videos cover every proficiency and skill outlined in the AP Research Course and Exam Description. Sign in to access them.

Performance Task Samples and Scoring Information

Go to AP Central to review student samples of the academic paper, as well as scoring information for both performance tasks, from past years.

AP Research Course and Exam Description

This is the core document for the course. It clearly lays out the course content and describes the assessment and the AP Program in general.

Services for Students with Disabilities

Students with documented disabilities may be eligible for accommodations for the through-course assessment and the end-of-course exam. If you’re using assistive technology and need help accessing the PDFs in this section in another format, contact Services for Students with Disabilities at 212-713-8333 or by email at [email protected] . For information about taking AP Exams, or other College Board assessments, with accommodations, visit the Services for Students with Disabilities website.

Guidance for Artificial Intelligence Tools and Other Services

Learn more about the AP Program’s policy on generative AI tools (e.g., ChatGPT).

Credit and Placement

Search AP Credit Policies

Find colleges that grant credit and/or placement for AP Exam scores in this and other AP courses.

Additional Information

AP ® Research Syllabus

9 pacing guide, 9.1 unit 1: introduction.

July/August : Develop research ideas/topics and formulate focused research questions. [CR1a] [CR1b]

Use Workbook (pp. 18–26) as a guide to turn a problem statement in your field of inquiry into a focused research question. [CR1a]

E-mail your teacher with your proposed research topic and focused research question. You may submit multiple topics/questions if you have not decided on just one. [CR1g]

• focused: narrowing in scope
• valuable: contributes to a new understanding in the field
• feasible: replicable method that can be completed in a few months in time for the final paper deadline

August/September : Conduct preliminary research on a research topic. Begin annotated bibliography. Refine research question and begin research proposals. Gain familiarity with the academic paper rubric. [CR1b] [CR1c] [CR1d]

Refer to Workbook (pp. 6–9) to explore different ways of knowing across disciplines. [CR1c]

• In your PREP, reflect on how your chosen discipline engages in research using your collected sources as examples. [CR1f] [CR4a]

Use Workbook (pp. 64–81) as a guide to begin your annotated bibliography. Focus on the following points:

• Select a discipline-specific style (e.g., MLA, APA, or Chicago) used in your field of inquiry. Refer to Workbook (p. 65) and Purdue OWL for detailed documentation on citation styles.
• Select and use a reference management software such as Mendeley to organize your sources and integrate your bibliography into Microsoft Word or LaTeX.
• Go through the process of SMARTER searches to ensure that sources are situated in your topic of inquiry from multiple perspectives, relevant to your research question, and integrated into the broader field of knowledge (Workbook, pp. 75–76). [CR1c] [CR1d]
• Begin your annotated bibliography with 5–10 sources. Add 5–10 sources every week to your annotated bibliography until you have enough sources to develop a literature review. Refer to Workbook (pp. 77-81) for sample annotated bibliography entries.
• When finding sources, you should use the PAARC test to assess credibility, validity, and relevance (Workbook, pp. 82–83).

Go through previous AP Research sample papers . Annotate sample papers using the new AP Research paper rubic .

9.2 Unit 2: Topic to Proposal

October/November : Complete research proposals for approval. Synthesize annotated bibliography into literature review. [CR1d] [CR3]

As a class, we will go over important ethical pratices in research, including the following:

• AP Capstone Policy on Plagiarism and Falsification or Fabrication of Information [CR2b]
• IRB process for research involving human subjects [CR2a]
• Consent forms for research participants [CR2a]
• Parental permission for research participants under age 18 [CR2a]

Do a dry run of an inquiry method using the Health Halos Experiment (Workbook, pp. 148–153). As a class, use this topic to fill out an inquiry proposal form as a sample.

With you own research topic, complete an initial draft of the inquiry proposal form. [CR3]

Use p. 77 of the Workbook as a reference to develop a brief elevator speech with an informal poster containing the following elements: [CR5]

• Proposal title
• Problem statement & research question
• Definitions, hypotheses, and importance of study
• Proposed research methods
• List of sources
• Develop slides to present elements of the inquiry proposal form for peer review. [CR1e] [CR1g] [CR5]

Revise inquiry proposal form to reflect peer review comments. [CR1e] [CR1f]

Submit inquiry proposal form to teacher for approval. If applicable, you should include IRB forms and identify potential expert advisors. You may not begin conducting research until your teacher approves your inquiry proposal form. [CR2a] [CR3]

• Store your PREP on a cloud server and share a password-protected URL link with your teacher for weekly progress check-ups.
• Create a folder in your PREP to document reflections on peer review comments as well as feedback from your teacher and expert advisors. [CR1f]

9.3 Unit 3: Research Methods

November/December : Learn and implement replicable research methods to address research question. [CR3]

Review Chapter 3 of Gray et al. (2007, pp. 33–56) for an overview on research design.

• Learn more about your research design and the specific research methods you will employ to conduct your research.
• As a starting point, establish if you will use qualitative, quantitative, or mixed methods. Reference “6. The Methodology” tab in USC Libraries Research Guides before you embark on more specific methods.

Review Chapters 8, 9, and 10 in Creswell (2009, pp. 145–225) for quantitative, qualitative, and mixed methods, respectively.

Create a research blueprint poster and present your proposed research design/methods to the class for peer review. [CR1e] [CR1g]

• Research question and hypothesis
• Literature review
• Continue to build more sources into annotated bibliography.
• Synthesize annotated bibliography into an initial literature review draft for the research proposal. [CR1d]
• Align research question with literature review and research methods. By the time you begin applying your research methods, your research question should no longer shift to ensure that you are not trying to make the data fit your question.
• Demonstrate that you are learning enough about your research methods to apply them properly in your own research. Create a separate folder in your PREP to document your learning process on research methods. [CR1f] [CR4a]

9.4 Unit 4: Academic Paper Drafts & Peer Review

January/February : Complete implementation of research methods. Undergo peer review of academic paper drafts. [CR3] [CR1e]

Finish conducting your research and documenting your results in your PREP. [CR4a]

Adapt your research proposal into the first draft of your academic paper. Refine the methods section of your paper to reflect findings from your research. Include a new section that analyzes and evaluates your results. Your conclusion should include limitations of the study and directions for future studies. [CR3]

• Submit your initial draft for peer review.
• File the peer review comments from your classmates into your PREP.

Develop slides on your research method and findings. Present results to the class for peer review. [CR1e] [CR1g]

9.5 Unit 5: Final Academic Paper, Presentation, and Oral Defense

March/April : Complete and submit final academic paper. Conduct 20-minute presentation with oral defense. [CR3] [CR5]

Incorporate peer review feedback into the second draft of the paper. [CR1e]

• Submit your second draft for a final round of peer review.

Refer to pages 58–59 of the AP Research Course and Exam Description for the list of oral defense questions. You will receive one question per section for a total of three questions and possibly some follow-up questions. [CR5]

• In your PREP, outline some responses to these questions as preparation for your oral defense. You will not know ahead of time which questions the panel will ask, so do not try to memorize responses.

Finalize academic paper and submit it to AP Digital Portfolio. Your teacher will dedicate class time for students to upload their final papers a few days before the official deadline. [CR3]

Sign up for a 20-minute time slot to present and orally defend your research. Prior to the presentations, we will go over the presentation and oral defense rubric . The presentations and oral defense will be recorded. [CR5]

9.6 Unit 6: Beyond AP Research

May/June : Finalize PREP and begin introduction to research tools necessary for research at the undergraduate and graduate levels.

Finalize your PREP with the following points in mind: [CR4a]

Include a readme file that documents the contents and purpose of each folder and file in your PREP. Anyone who reads through your readme file should be able to understand how to navigate your PREP without ever having worked with you during the research process.

Finalize data documentation that includes metadata (i.e., data about the data) and step-by-step instructions that show how you used the data in your research methods to arrive at your results. Anyone with your PREP should be able to locate the data documentation file from your readme file descriptions and follow your instructions to replicate your results.

Explore current best practices of reproducible research.

• R (using RStudio)
• LaTeX (using TeXStudio)
• R Sweave (Rnw files = R + LaTeX)
• R Markdown (R + Markdown to produce HTML, Word, LaTeX, and PDF outputs)
• Instead of saving multiple versions of the same file with version numbers appended to the file name, you can use just one file and commit changes to a repository, which will store metadata about each version of the file.

Develop a basic static website to showcase your research for college applications and future employment.

• We will use the R blogdown package to develop a basic static website with Hugo, an open-source website generator. Hosting the site is completely optional.
• Research portfolio
• Research blog posts
• Publication section

Get the Reddit app

A subreddit for AP Research students and a way to communicate ideas. hi dad :)

how do you write a literature review

By continuing, you agree to our User Agreement and acknowledge that you understand the Privacy Policy .

Enter the 6-digit code from your authenticator app

You’ve set up two-factor authentication for this account.

Enter a 6-digit backup code

Create your username and password.

Reddit is anonymous, so your username is what you’ll go by here. Choose wisely—because once you get a name, you can’t change it.

Reset your password

Enter your email address or username and we’ll send you a link to reset your password

Check your inbox

An email with a link to reset your password was sent to the email address associated with your account

Choose a Reddit account to continue

All Subjects

What is AP Research and How Do I Find a Topic of Inquiry?

10 min read • june 18, 2024

Dylan Black

Introduction to AP Research

Welcome to the second class in the AP Capstone program! Fresh out of AP Seminar, you're ready to take on the next and final step in your journey to earning a Capstone Diploma: AP Research. AP Research is a class that is all about  the students . That's right, the students. This class can be summed up in one word:  individualistic . As will be seen in just a few minutes, the class truly is what you make of it. In this guide, we'll dive right into it with what AP Research is all about, what differs it from Seminar, and how to find the perfect topic of inquiry and research question .

❓ What is AP Research?

AP Research is a beast 👹 of a course, and while this might be coming from my perspective as a veteran of the course, most students will agree that it is a TON of work, and only 8 to 9 months maximum to do it.

While AP Seminar consists of using collected, already established evidence to prove points, AP Research has you collecting your  own data. Meaning you'll need to conduct a study, analyze content, experiment, or whatever you want.

Seriously.  Whatever your little heart ❤️ desires.

I’ve seen papers on milk cartons, data mining on social media, Disney’s  Big Hero Six, and everything in between. In my class alone, there were students studying nutrition, concerts, climate change, water cleanliness, and so much more. The only thing that truly ties together these papers is that they are new, original research that adds to a body of knowledge. Pretty broad, we know.

To further push this point, here are some sample AP Research paper titles from high scoring students:

“Making Health Education LGBTQ+ Inclusive in Vermont High Schools”

“Growth For Good: How Past Experiences Motivate Executives to Join Double Bottom Line Organizations in The Indian Construction Industry”

“Music Chemistry: The Formula of K-Pop”

And those are just from 2017 alone. AP Research lets loose the reins and allows students to quite literally go wild on whatever they want to study. That's why AP Research is  such an awesome course .

There are five required sections to the paper: an introduction, a literature review , a methodology , data and/or results and analysis, a conclusion, and a bibliography . The following guides will follow this structure as you go through the AP Research journey.

Throughout the year, students do intensive, in-depth research into a specific discipline , identify a  gap in that field, and fill it. This includes conducting a formal literature review ; designing a proper, justifiable methodology that will fill the gap; and, finally, actually  doing it. The first step of it all, however, is finding a topic, and that's what we'll take a look at first.

🔎 How to Find A Topic of Inquiry

What even is a topic of inquiry.

A  topic of inquiry can be defined fairly succinctly: it is the topic that a paper covers. For example: if you are studying education, a topic of inquiry may be "the impacts of flipped classrooms on high school level regular, honors, and AP math classes". Note that the topic of inquiry is detailed and specific. This might seem really simple, but in reality, figuring this out can in fact be one of the hardest parts of this class. Odds are, your teacher had you thinking about this early, maybe even over the summer. Many students think topic of inquiry = discipline. This is NOT true. A discipline is the broad area of study that a paper is focused within. For example,  disciplines include economics, film, art, chemistry, physics, music, and even broader, hard sciences, social sciences, humanities, etc. Rather, a topic of inquiry is narrow. It's specific. Think of it this way: if someone put all of a class's topics of inquiry in a hat and pulled them at random, they should be able to easily identify each person who wrote that paper, even if a few students had similar broad focuses.

Finding a Broad Focus

The first step in finding a topic of inquiry is identifying a  discipline . This can be a subject you want to major in, a passion of yours, or just something you want to learn more about. Personally, I suggest going with something you have some prior knowledge in, but that doesn't mean you can't explore something new. On a similar note, you may go into Research with what you think is a plan, the perfect plan, a research question and topic of inquiry that will carry you straight to a 5. However, when starting Research,  expect for your plans to change . I'll use myself as an example. The summer going into AP Research, I was  dead set on doing educational research. I even had a topic of inquiry in mind: I was going to study the impacts of flipped classrooms on different levels of classes (AP, Honors, etc.). Perfect, beautiful, time to win Research.  However , this plan very quickly fell apart, and by the end of October, I was re-narrowing a topic of focus about  Moon , a science fiction film by Duncan Jones.

In my philosophy, finding your "perfect topic" isn't something you can necessarily "try" to do. If you keep asking yourself "is this  my topic?" you'll overthink and keep flip flopping. Instead, you'll know your topic when you see it. I know this sounds sappy and almost romantic, but it's true (heck, my teacher referred to "marrying" your topic at least 3 times). I first watched  Moon in chemistry class nearly a YEAR before Research started and I found myself studying its themes of Marxism within two months out of nowhere.

Narrowing a Focus and Finding a Gap in . . . Wait For It . . . Research!

So you've got a broad focus, now what? At this point, you want to start  narrowing it down . When I say narrowing, I mean taking what is typically a broad idea and doing  research (ah, there's the dreaded word!) to go from this broad topic to a true topic of inquiry. Before we get into this, let's start talking about  gaps .

What is a Gap?

AP Research is all about finding and closing a  gap in the  body of knowledge . These are some new terms, so let's start by defining them.

The  body of knowledge is all of the "stuff" that is known about your broad focus. For example, let's suppose you have decided that you want to study perceptions of advertising among different age groups (this was just a random off the cusp topic—if you don't want to do something like this, that is  fine ). Obviously, this broad a topic has been studied. The  body of knowledge is all of that stuff that HAS been studied. Essentially, it is the research questions that have already been addressed and therefore have already been covered. Your goal in AP Research is to find a question that hasn't been answered and then answer it! That's where  the gap comes in.

Get very,  very used to this term folks. The  gap describes this tiny bit of research that has not been uncovered, and guess whose job it is to uncover it? YOU!!!! Welcome to the purpose of AP Research:  filling the gap .

The idea of the gap can feel super intimidating, and that's because it is! Research is so crazy deep and so intense and the idea of having to find something  nobody has studied can feel impossible. In fact, it really is. There is no way to read every paper on every subtopic of subtopic of your body of knowledge. On this point, by filling the gap, I'm not saying you have to make a revolutionary discovery and save the world. In fact, the opposite applies to the majority of AP Research papers. Odds are, you're not about to cure cancer or solve global warming with your paper. Instead, find something small and very niche about your topic—which isn't to say it won't be interesting/important to your discipline and certainly not the discourage you, just that most AP Research papers aren't going to be published in  Nature anytime soon.

On a similar note, feasibility is a really important part of narrowing down your focus. When coming up with a topic of inquiry, understand your limitations. You are (assuming school starts in August) given approximately 10 months to conduct your research, write your paper, and do your presentation. While you shouldn't let this hold you back, you should know that you cannot plan anything super large or super time consuming. For example, you may  really want to study a population over multiple years, but you simply  don't have the time.

For example, suppose your topic of inquiry was "migration patterns of blue whales between June and September in the Northeast Atlantic." While this is a super interesting topic and one that may be a really great paper, it is far from feasible. Not only is there the problem of location, but timing and the sheer expense of taking on a project like this is simply not feasible. In some cases, like perhaps in this one, the solution may unfortunately be to pick a different topic. However, if you're able to make your topic more feasible by adjusting things for timing, costs, etc. you'll have a better topic in the end.

Finding the Gap With the Power of Little-R Research

So now that we understand what the gap is and why it's important, let's talk about how to find the gap. The simple answer is research! When I say research in this context, I'm referring to what's called " little-r research " . This means that I'm referring to the use of databases and other tools to find already published work, basically what you did in AP Seminar last year. By comparison, " big-R Research " can be described as your generation of  new data and facts that have not been figured out yet. These are by no means scientific terms, but can help when describing how we do research/Research.

When doing your little-r research, you want to use databases and collect as much data and papers as you can. I recommend finding 50+ sources about your topic, slowly narrowing down as you go forward. By reading and really diving deep into these sources you'll be able to A) slowly figure out what questions you have and B) narrow down your topic of inquiry to eventually finding (drumroll . . .) A GAP!!! This is NOT an easy process and will take a lot of thinking and effort on your end, but eventually you'll find a very VERY specific topic of inquiry that will fill a gap situated in a body of knowledge AND you'll essentially be an expert in your topic. Seriously, this is going to be like drinking information from a firehose.

** Key Tip! When organizing your sources, use  Zotero , a free online research tool that helps you keep your sources in check.  Mendeley is also a super great tool.**

** Key Tip Round 2! If 50 sources sounds like a loooot and you're struggling to find related resources, look in the bibliographies of your papers that you have! Odds are they'll be related and might help you uncover new gaps.**

💻 A Note on Credibility and Choice of Sources

When doing your little-r research, it's important to take note of new standards of credibility and how to choose your sources. In Seminar, the most typical form of credibility was someone's credentials: things like PhDs, other degrees, positions, etc. While this still plays a large role in credibility in Research, it goes one step farther here. No longer is just someone's degree a telling sign of their credibility, but also their prior research. As you get more and more specific, you need  experts .

For example, let's suppose that we moved from our broader topic of perceptions of advertising among different age groups to now finding a gap and filling it by researching how Baby Boomers vs. members of Gen-Z respond to advertising on social media platforms, specifically comparing TikTok to Instagram (again, random topic and a random gap. This is all for example purposes!). First and foremost, dang, our topic has become focused! But secondly, when doing our little-r research now, the papers that we read have to be just as focused. Therefore, when evaluating credibility, we want people with this in-depth specific, knowledge, not just "PhD in Advertising".

Furthermore, the sources that you use will vary greatly based on your question, discipline, and focus. A paper on medicine is going to have a MUCH different source layout than historical research or economic research. Thus, you want to learn how your discipline conducts research on an individual level and what sources are optimal for your eventual introduction and literature review.

Whew! That was . . . a lot. However, you now know how to figure out what you want your topic to be and are ready to officially start the research process! AP Research is a beast of a course, but with the proper time and effort, it is truly a class that allows students to explore their interests and become an in depth expert on a specific topic. In the next guide we'll take a look at writing the introduction to your paper. Good luck!

Key Terms to Review ( 13 )

© 2024 fiveable inc. all rights reserved., ap® and sat® are trademarks registered by the college board, which is not affiliated with, and does not endorse this website..

• UWF Libraries

Literature Review: Conducting & Writing

• Sample Literature Reviews
• Steps for Conducting a Lit Review
• Finding "The Literature"
• Organizing/Writing
• APA Style This link opens in a new window
• Chicago: Notes Bibliography This link opens in a new window
• MLA Style This link opens in a new window

Sample Lit Reviews from Communication Arts

Have an exemplary literature review.

• Literature Review Sample 1
• Literature Review Sample 2
• Literature Review Sample 3

Have you written a stellar literature review you care to share for teaching purposes?

Are you an instructor who has received an exemplary literature review and have permission from the student to post?

Please contact Britt McGowan at [email protected] for inclusion in this guide. All disciplines welcome and encouraged.

• << Previous: MLA Style
• Next: Get Help! >>
• Last Updated: Aug 8, 2024 11:00 AM
• URL: https://libguides.uwf.edu/litreview

Literature Reviews

• What is a Literature Review?
• Steps for Creating a Literature Review
• Providing Evidence / Critical Analysis
• Challenges when writing a Literature Review
• Systematic Literature Reviews

Developing a Literature Review

1. Purpose and Scope

To help you develop a literature review, gather information on existing research, sub-topics, relevant research, and overlaps. Note initial thoughts on the topic - a mind map or list might be helpful - and avoid unfocused reading, collecting irrelevant content.  A literature review serves to place your research within the context of existing knowledge. It demonstrates your understanding of the field and identifies gaps that your research aims to fill. This helps in justifying the relevance and necessity of your study.

To avoid over-reading, set a target word count for each section and limit reading time. Plan backwards from the deadline and move on to other parts of the investigation. Read major texts and explore up-to-date research. Check reference lists and citation indexes for common standard texts. Be guided by research questions and refocus on your topic when needed. Stop reading if you find similar viewpoints or if you're going off topic.

You can use a "Synthesis Matrix" to keep track of your reading notes. This concept map helps you to provide a summary of the literature and its connections is produced as a result of this study. Utilizing referencing software like RefWorks to obtain citations, you can construct the framework for composing your literature evaluation.

2. Source Selection

Focus on searching for academically authoritative texts such as academic books, journals, research reports, and government publications. These sources are critical for ensuring the credibility and reliability of your review. 

• Academic Books: Provide comprehensive coverage of a topic.
• Journal Articles: Offer the most up-to-date research and are essential for a literature review.
• Research Reports: Detailed accounts of specific research projects.
• Government Publications: Official documents that provide reliable data and insights.

3. Thematic Analysis

Instead of merely summarizing sources, identify and discuss key themes that emerge from the literature. This involves interpreting and evaluating how different authors have tackled similar issues and how their findings relate to your research.

4. Critical Evaluation

Adopt a critical attitude towards the sources you review. Scrutinize, question, and dissect the material to ensure that your review is not just descriptive but analytical. This helps in highlighting the significance of various sources and their relevance to your research.

Each work's critical assessment should take into account:

Provenance:  What qualifications does the author have? Are the author's claims backed up by proof, such as first-hand accounts from history, case studies, stories, statistics, and current scientific discoveries? Methodology:  Were the strategies employed to locate, collect, and evaluate the data suitable for tackling the study question? Was the sample size suitable? Were the findings properly reported and interpreted? Objectivity : Is the author's viewpoint impartial or biased? Does the author's thesis get supported by evidence that refutes it, or does it ignore certain important facts? Persuasiveness:  Which of the author's arguments is the strongest or weakest in terms of persuasiveness? Value:  Are the author's claims and deductions believable? Does the study ultimately advance our understanding of the issue in any meaningful way?

5. Categorization

Organize your literature review by grouping sources into categories based on themes, relevance to research questions, theoretical paradigms, or chronology. This helps in presenting your findings in a structured manner.

6. Source Validity

Ensure that the sources you include are valid and reliable. Classic texts may retain their authority over time, but for fields that evolve rapidly, prioritize the most recent research. Always check the credibility of the authors and the impact of their work in the field.

7. Synthesis and Findings

Synthesize the information from various sources to draw conclusions about the current state of knowledge. Identify trends, controversies, and gaps in the literature. Relate your findings to your research questions and suggest future directions for research.

Practical Tips

• Use a variety of sources, including online databases, university libraries, and reference lists from relevant articles. This ensures a comprehensive coverage of the literature.
• Avoid listing sources without analysis. Use tables, bulk citations, and footnotes to manage references efficiently and make your review more readable.
• Writing a literature review is an ongoing process. Start writing early and revise as you read more. This iterative process helps in refining your arguments and identifying additional sources as needed.  

Brown University Library (2024) Organizing and Creating Information. Available at: https://libguides.brown.edu/organize/litreview (Accessed: 30 July 2024).

Pacheco-Vega, R. (2016) Synthesizing different bodies of work in your literature review: The Conceptual Synthesis Excel Dump (CSED) technique . Available at: http://www.raulpacheco.org/2016/06/synthesizing-different-bodies-of-work-in-your-literature-review-the-conceptual-synthesis-excel-dump-technique/ (Accessed: 30 July 2024).

Study Advice at the University of Reading (2024) Literature reviews . Available at: https://libguides.reading.ac.uk/literaturereview/developing (Accessed: 31 July 2024).

Further Reading

Frameworks for creating answerable (re)search questions  How to Guide

Literature Searching How to Guide

• << Previous: Steps for Creating a Literature Review
• Next: Providing Evidence / Critical Analysis >>
• Last Updated: Sep 4, 2024 11:43 AM
• URL: https://library.lsbu.ac.uk/literaturereviews

Democracy and Foreign Direct Investment in BRICS-TM Countries for Sustainable Development

• Open access
• Published: 05 September 2024

Cite this article

You have full access to this open access article

• Ibrahim Cutcu   ORCID: orcid.org/0000-0002-8655-1553 1 &
• Ahmet Keser   ORCID: orcid.org/0000-0002-1064-7807 2  

5 Altmetric

The study aims to examine the long-term cointegration between the democracy index and foreign direct investment (FDI). The sample group chosen for this investigation comprises BRICS-TM (Brazil, Russia, India, China, South Africa, Turkey [Türkiye], and Mexico) countries due to their increasing strategic importance and potential growth in the global economy. Data from 1994 to 2018 were analyzed, with panel data analysis techniques employed to accommodate potential structural breaks. The level of democracy serves as the independent variable in the model, while FDI is the dependent variable. Inflation and income per capita are considered control variables due to their impact on FDI. The analysis revealed a long-term relationship with structural breaks among the model’s variables. Democratic progress and FDI demonstrate a correlated, balanced relationship over time in these countries. Therefore, governments and policymakers in emerging economies aiming to attract FDI should account for structural breaks and the correlation between democracy and FDI. Furthermore, the Kónya causality tests revealed a causality from democracy to FDI at a 1% significance level in Mexico, 5% in China, and 10% in Russia. From FDI to democracy (DEMOC), there is causality at a 5% significance level in Mexico and a 10% significance level in Russia. Thus, the findings suggest that supporting democratic development with macroeconomic indicators in BRICS-TM countries will positively impact foreign direct capital inflows.

Graphical Abstract

Avoid common mistakes on your manuscript.

Introduction

Economies and governments require capital infusion to augment their production and employment levels. Underdeveloped and developing nations, despite having an abundance of land and labor, grapple with capital deficiencies. Consequently, these countries often seek foreign direct investment (FDI) to address this capital shortfall. Even emerging market economies are not immune to this phenomenon, with challenges intensifying globally post-COVID-19 pandemic. Khan et al. ( 2023 ) highlighted the pivotal role of institutional quality and good governance in attracting FDI. The need for FDI has grown exponentially in an increasingly globalized world characterized by interdependence among states. Democracy and the democratic status of states emerge as critical indicators of institutional quality. Kilci and Yilanci ( 2022 ) posit that the prolonged pandemic triggered the third most significant recession since the Great Depression of 1929 and the Global Financial Crisis of 2008–2009. Consequently, the demand for FDI has surged, positioning foreign investment as the foremost resource for fostering sustainable economic development. In light of the provided frame, this study addresses the following research questions:

What factors attract foreign direct investment to a country?

Which factors positively impact FDI?

Reviewing the existing literature reveals that scholars from diverse disciplines address similar questions using political variables like political stability and democracy levels or economic variables such as economic stability and natural resources . However, the impact of democracy on FDI is often overlooked . For example, studies by Baghestani et al. ( 2019 ) and Gür ( 2020 ) investigated variables like oil prices, exchange rates, exports, imports, and the global innovation index but seldom considered democracy’s role in attracting FDI . Similarly, studies examining the relationship between democracy and FDI, like those by Yusuf et al. ( 2020 ) and Ahmed et al. ( 2021 ), generally excluded data from BRICS-TM countries.

Li and Resnick ( 2003 ) assert that the two paramount features of modern international political economy are the proliferation of democracy and increased economic globalization . It has become apparent that FDI inflow is a manifestation of high-level globalization and the diffusion of democracy. According to the United Nations Conferences on Trade and Development (UNCTAD), 2002 data between 1990 and 2000, three-quarters of the total international foreign direct capital was directed toward democratic and developed countries (Busse, 2003 ).

The conceptualization of democracy, within both theoretical and historical frameworks, has been marked by inherent challenges (Suny, 2017 ). Aliefendioğlu ( 2005 ) defines democracy as the amalgamation of the ancient Greek terms “Demos” and “Kratos,” centered on the principle of self-governance by the people. In essence, democracy encompasses the utilization of popular sovereignty by and for the citizenry (Keser et al., 2023 ). Haydaroğlu and Gülşah ( 2016 ) contend that the contemporary manifestation of democracies is rooted in representative democracy, wherein individuals exercise their sovereignty by selecting representatives to act on their behalf. The spread of liberal or representative democracy is believed to be a driving force behind this shift in economic structures. The relational intersection between FDI flow and democratic mechanisms needs to be investigated. At this point, Voicu and Peral ( 2014 ) argue that economic development and modernization operate as background factors that affect the development of support for democracy. Therefore, an opinion emerges that there is an inevitable intersection between FDI flow and democratic mechanism.

Despite the sustained attention from academia and the public, the detailed understanding of democracy’s effect on FDI remains limited (Li & Resnick, 2003 ). There is a noticeable gap in the literature concerning studies investigating the impact of democracy on FDI, specifically in BRICS-TM countries , which are emerging markets that attract significant FDI. Moreover, the absence of structural break panel cointegration tests in previous analyses accentuates these gaps, forming the primary motivation for this research . The study aims to fill these voids by empirically examining the relationship between democracy and FDI using data from the emerging markets of BRICS-TM countries. These countries require substantial foreign capital and are crucial for the stable development of the global economy since they are expected to become pivotal centers in the multipolar world system. The study differs from other publications, employing unique methods, such as structural break panel cointegration tests, to address these objectives.

Reducing costs, increasing employment-oriented production, and enhancing export capacity are paramount in global competition. If a country cannot achieve these advancements with its existing potential and dynamics, attracting foreign capital becomes imperative, necessitating the creation of multiple attraction points to entice foreign direct investments. Consequently, attracting foreign capital is significant in today’s globalized world. This study provides insights into this pressing issue in the contemporary global competitive landscape by analyzing the long-term relationship between democracy and foreign direct investment. Considering their prominence in the world economy due to recent economic growth and competitive structures, the selection of BRICS-TM countries as a sample group underscores the study’s importance. The study acknowledges the strategic importance and increasing power of BRICS-TM countries, especially China and India, which have consistently attracted significant foreign capital in recent years. Using panel data analysis techniques that incorporate structural breaks addresses a crucial gap in the literature, offering a more accurate analysis of the democracy-foreign direct investment relationship in the BRICS-TM sample group. However, data constraints related to model variables alongside the limitations of evaluating results within the framework of the chosen sample group are acknowledged later in the “ Discussion ” section.

Lastly, there appears to be a gap in the existing literature concerning studies that investigate the impact of democracy on FDI flow in BRICS-TM countries . The countries that attract more FDI than others raise the question of whether their democracy level empirically influences the amount of FDI. Moreover, upon examining the limited studies exploring the relationship between democracy and FDI, it is evident that none applied the structural break panel cointegration test in their analyses. These gaps collectively serve as the primary motivation for this research. Thus, the study aims to address these gaps in the existing literature and scrutinizes whether there is cointegration between the level of democracy and FDI in a country by utilizing sample group data from emerging markets of BRICS-TM countries. This selection is significant as these countries are among emerging economies with considerable developmental potential. In essence, this study aims to empirically unveil the relationship between democracy and FDI , a crucial requirement for developing economies striving to attract more foreign capital for sustainable development . Additionally, this study employs distinctive methods, such as the structural break panel cointegration test, to investigate the subject, further elaborated in the “ Research Method and Econometric Analysis ” section.

In global competition, the imperative to reduce costs, increase employment-oriented production, and enhance export capacity is paramount. Given a country’s potential and dynamics, if these enhancements prove elusive, the necessity arises to attract foreign capital and establish various attraction points to incentivize foreign direct investments. Therefore, attracting foreign direct investment (FDI) to a country holds tremendous significance in today’s globalized world. Before investing, foreign capital rigorously assesses the potential profit opportunities and scrutinizes various socio-economic indicators, especially democracy. For these reasons, by analyzing the long-term relationship between democracy and foreign direct investment in the BRICS-TM sample, this study incorporates analyses and inferences regarding this crucial challenge in today’s globally competitive environment.

Furthermore, it is anticipated that the strategic importance and influence of BRICS-TM countries will continue to escalate in the upcoming years. Notably, countries in the sample group, particularly China and India, have consistently attracted substantial foreign capital, and their economies exhibit ongoing growth. As evident from the graphical analysis in the study, China stands out as the world leader in attracting foreign direct investment. Considering the economic size of Russia and Brazil, the geo-strategic location of Türkiye, and the natural resource wealth of China, India, and Mexico, it is apparent that these countries are central attractions for foreign direct capital. Events with significant consequences on the global stage, such as economic crises, wars, earthquakes, and elections, can induce substantial fluctuations and structural breaks in national economies. Hence, using panel data analysis techniques that allow for structural breaks in the study fills a critical gap in the literature. This approach provides a more accurate analysis of the democracy-foreign direct investment relationship in the BRICS-TM sample group. The primary limitation in the study’s analysis is the constraint arising from the variables included in the model. Additionally, selecting the BRICS-TM sample group as the focus on developing countries can be considered another limitation, restricting the evaluation of results within this specific sample framework. The study anticipates that the policy recommendations derived from the analysis findings will guide policymakers, market players, and new researchers.

The article is organized into the following sections: (1) “ Introduction ” section: This section initially furnishes broad information concerning the subject matter, elucidating the lacunae in the existing literature and delineating the limitations of the study. (2) “ Theoretical Frame and Literature Review ” section: Subsequently, the second section delves into the examination of the theoretical framework, scrutinizing the prevailing status of the literature. (3) “ Research Method and Econometric Analysis ” section: The third segment comprehensively addresses the research methodology employed and expounds upon the econometric analysis conducted. (4) “ Results ” section: The ensuing fourth chapter presents the study’s findings and results. (5) “ Discussion ” section: These results and findings are then systematically expounded upon in the fifth chapter within the context of the current literature. (6) “ Conclusion ” section: Culminating the study is a concluding section encapsulating the critical insights derived, followed by policy recommendations.

Theoretical Frame and Literature Review

As previously indicated, scarce studies have delved into the correlation between democracy and foreign direct investment (FDI). A comprehensive examination of the existing literature reveals a notable dearth of research focused on BRICS-TM countries, with most of them overlooking “democracy” as a variable and/or the connection between “democracy and FDI.” Conversely, researchers investigating FDI predominantly explore its associations with other variables, such as “exports and imports.”

The Status of the Literature on BRICS-TM Countries and Democracy and Foreign Direct Investment

The following two tables summarize the status of the current literature on the issue and its findings. In Table  1 , the literature on BRICS and/or BRIC + S + T + M countries, as well as its variables, methods, and findings, is given. Then, in Table  2 , the studies researching the relationship between democracy and FDI, their methodology, sample groups, and findings are summarized.

As can be seen in Table  1 , BRICS-TM countries were very rarely studied, and almost all of these studies neglected “democracy” as a variable and/or the relation between “democracy and FDI.” Alternatively, the studies that did examine FDI researched its relation with other variables such as export and import. Unique methods, such as structural break panel cointegration tests, were applied to investigate the issue, and this method comprises the novel part of the study. The details can be seen under the “ Research Method and Econometric Analysis ” section.

In summary, the literature review provided in Table  1 covers the relationship between democracy, foreign direct investment (FDI), and various other economic variables, focusing on BRICS-TM countries. Below is an analysis of the essential findings and gaps identified in the literature:

By applying AI (ChatGPT) to the information provided in Table  1 (studies on BRIC + S + T + M countries), key findings are double-checked and summarized below:

Limited focus on BRICS-TM countries: The literature review notes a scarcity of studies on BRICS-TM countries, with a lack of attention to the “democracy” variable in the context of FDI.

Variable relationships explored: Various studies investigate the relationships between different economic variables and FDI, such as oil prices, exchange rates, gross domestic product (GDP), international tourism, economic output, carbon emissions, exports, imports, and innovation.

Diverse methodologies: Researchers employ diverse methodologies, including directional analysis, panel ARDL cointegration, survey research, and panel cointegration, to analyze the relationships among variables.

Within this frame, a summary of the studies investigating the relationship between democracy and FDI or using similar variables is given in Table  2 .

As presented in Table  2 , none of the above studies analyzed the relationship among democracy, FDI, inflation , and GDP variables for BRICS-TM countries. In addition, none of the studies applied a structural break panel cointegration test in their analysis. All these gaps motivate the authors of this study to conduct such research.

Additionally, applying AI (ChatGPT) to the information provided in Table  2 , key findings from Table  2 are double-checked and summarized below (studies on the relationship between democracy and economics):

Limited studies on democracy and FDI in BRICS-TM: The literature highlights a gap in research, as none of the studies in Table  2 specifically analyze the relationship between democracy, FDI, inflation, and GDP variables in BRICS-TM countries.

Contradictory findings on democracy and economic growth: The studies in Table  2 present contradictory findings on the impact of democracy on economic growth. Some find a positive and significant effect, while others do not establish a significant relationship.

Methodological variety: Various methods, such as dynamic fixed effects, panel data regression analysis, panel cointegration, and causality analysis, are employed to explore the relationships between democracy, FDI, and economic growth.

Upon inspection of the limited studies, contradictory results emerge, even when employing data from diverse sample groups. An illustrative example is found in the work of Busse ( 2003 ), whose research can be summarized as follows:

Results from regression analysis between FDI and democracy reveal that analogous to studies by Rodrik ( 1996 ) and Harms and Ursprung ( 2002 ), multinational corporations (MNCs) exhibit a preference for countries where political rights and freedoms are legally and practically safeguarded.

Countries that enhance their democratic rights and freedoms tend to attract more FDI per capita than predicted (Busse, 2003 ).

Li and Resnick ( 2003 ) posited that investors typically favor regimes with advanced democracy and robust legal systems over states where their properties are at risk in dictatorial regimes. From this standpoint, one can infer that a significantly high level of democracy correlates with a markedly high level of FDI. In other words, property rights violations are diminished in developing countries with robust democracies, leading to increased FDI levels (Li & Resnick, 2003 ).

However, Haggard ( 1990 ) presents a contrary perspective, arguing that authoritarian regimes may appeal more to investors seeking to safeguard their economic assets and properties. An amalgamation of opposing views arises: investors from countries with underdeveloped democracies prefer collaboration with authoritarian regimes, whereas investors from developed nations lean toward familiar democratic regimes.

Despite the contradictory and complex findings from the limited number of studies on the potential relationship between democracy and FDI, it is contended that two influential factors contribute to investment flow toward countries with legally guaranteed and well-developed democratic rights. Firstly , as proposed by Spar ( 1999 ), a transition occurs from critical sectors like agriculture and raw materials to production and tertiary sectors in the flow and stock structure of FDI in developing countries. Secondly , there is a transformation in the interest and motivation of multinational enterprises toward developing countries based on sectoral development (Busse, 2003 ). This underscores the impact of democratic organizations established to secure democratic rights on FDI. In instances where poor democratic governance renders a country less appealing to foreign investors, the country faces a dilemma: choosing between the limited options of “loss of foreign capital” or “democratization” (Li & Resnick, 2003 ). Spar ( 1999 ) emphasizes that as the reliance on governments and their policies decreases, the need for a more democratic environment, a reliable and stable legal system, and appropriate market conditions becomes increasingly crucial for the overall well-being of the country’s economy.

Upon scrutinizing the most recent studies on the subject, a trend of contradictory findings becomes apparent. For instance, Yusuf et al. ( 2020 ) found that the democracy coefficient, as a variable signifying its impact on economic growth, lacks significance for West African countries in the short and long run. In contrast, Putra and Putri ( 2021 ) asserted that “democracy has a positive and significant effect on economic growth in 7 Asia Pacific countries.” Similar to Yusuf et al., in a panel data analysis encompassing the period from 1970 to 2014 and involving 115 developing countries, Lacroix et al. ( 2021 ) concluded that “democratic transitions do not affect foreign direct investment (FDI) inflows.”

A comprehensive review of existing empirical studies reveals a notable scarcity in the number of inquiries into the relationship between democracy and foreign direct investment (FDI) (Li & Resnick, 2003 ). Moreover, the available studies yield contradictory results on this matter. Addressing this issue, it is noteworthy that Oneal ( 1994 ) conducted one of the initial qualitative examinations on the impact of regime characteristics on FDI. Despite not identifying a statistically valid relationship between regime type and FDI flow, Oneal’s research is an early exploration of this intricate relationship.

Explorations into the connection between investor behavior and political regime characteristics, particularly in determining whether democratic or authoritarian features foster more foreign direct investment (FDI), have yielded divergent outcomes. Derbali et al. ( 2015 ) found a statistically significant relationship between FDI and democratic transformation. Through an econometric analysis encompassing a sample of 173 countries, with 44 undergoing democratic transformation between 1980 and 2010, the authors observed a substantial increase in FDI flow associated with democratic transitions.

Castro ( 2014 ) conducted a test examining the relationship between foreign direct investment (FDI) flow (the ratio of FDI flow to GDP) and indicators of “democracy” and “dictatorship” using a dynamic panel data model. Despite the analysis results failing to furnish evidence supporting a direct connection between FDI and democracy, the author emphasizes that this outcome does not negate the impact of political institutions on the flow of FDI. According to Mathur and Singh ( 2013 ), their study stands out as the inaugural examination focusing on the “importance given to economic freedom rather than political freedom” in the decision-making process of foreign investors. The authors concluded that contrary to conventional expectations, even democratic countries may attract less foreign direct investment (FDI) if they do not ensure guaranteed economic freedom. Malikane and Chitambara ( 2017 ) conducted a study exploring the relationship between democracy and foreign direct investment (FDI), employing data from eight South African countries from 1980–2014. The research findings indicate a direct and positive impact of FDI on economic growth due to the robust democratic institutions emerging as crucial catalysts in the respective sample countries.

Consequently, Malikane and Chitambara’s ( 2017 :92) study suggests that the influence of FDI on economic growth is contingent upon the level of democracy in the host country. Upon scrutinizing the studies above, a pattern of conflicting findings emerges concerning the relationship between the level of democracy and the influx of foreign direct investment (FDI) to a country . Studies commonly emphasize that the impact of democracy on FDI depends upon each country’s developmental stage. The prevalence of confusion, varying findings, and conflicting results underscores the significance of empirical analyses on this matter. A comprehensive examination of the overview identified gaps, and the need for new research is detailed under the subsequent subheading.

Overview of the Literature, Identified Gaps, and Requirements for New Research

After a detailed overview of the existing literature, the main features and gaps can be identified as follows:

Limited studies on democracy and FDI: The literature notes a scarcity of studies examining the relationship between democracy and FDI, and existing studies present conflicting results.

Context-dependent impact of democracy: Contradictory findings suggest that democracy’s impact on FDI may vary depending on a country’s development level.

Gap in BRICS-TM studies: The identified gap in the literature is the lack of research specifically addressing the relationship between democracy and FDI in BRICS-TM countries. The need for a structural break panel cointegration test is also emphasized.

Influence of political institutions: Some studies argue that solid democratic institutions positively influence FDI, while others suggest that economic freedom, rather than political freedom, may be more crucial for attracting FDI.

Requirements for new research: To fill the gap in the literature, new research should be conducted specifically targeting BRICS-TM countries.

Thus, when c onsidering the contradictory findings, future studies should explore the contextual factors influencing the relationship between democracy and FDI in different country settings. Conducting longitudinal analyses could provide insights into the dynamic relationship between democracy and FDI over time. Comparative studies between countries with different levels of democratic development can help in understanding the nuanced impact of democracy on FDI. Last but not least, given the emphasis on structural break panel cointegration tests, future research could incorporate these analytical tools for a more comprehensive understanding of the relationships under consideration.

Last but not least, Olorogun ( 2023 ) conducted research using data from sub-Saharan countries from 1978 to 2019 and found a “long-run covariance between sustainable economic development and foreign direct investment (FDI)” and a “significant level of causality between economic growth and financial development in the private sector, FDI, and export.” So, if a significant relationship can be found between democracy and foreign direct investment, the results may also provide a useful assessment for sustainable development.

In summary, while the literature review reveals valuable insights into the complex relationship between democracy, FDI, and economic variables, there is a clear need for more targeted research in the context of BRICS-TM countries by further exploration of the contextual factors influencing these relationships.

Research Method and Econometric Analysis

This section of the study delves into the analysis methods and interpretations of the relationship between democracy and foreign direct investment (FDI). The presentation encompasses the dataset and model specifications concerning the variables under scrutiny. Specifically, analyses were conducted utilizing econometric analysis programs, namely, EViews 12 , Gauss 23 , and StataMP 64 . The study culminated with interpreting findings and formulating policy recommendations based on the results obtained.

Data Set and Model

The study scrutinized the hypothesis to address the initial research inquiry, asserting a correlation between democracy and foreign direct investment (FDI). The research targeted BRICS-TM countries (Brazil, Russia, India, China, South Africa, Türkiye, Mexico) recognized for their increasing prominence in the global economy and anticipated growth in strategic significance. These seven emerging markets were chosen due to their demonstrated potential to attract FDI. The research covered annual data spanning 1994–2018 by employing panel data analysis techniques capable of accommodating structural breaks. Both democracy and foreign direct investments are susceptible to the influence of local and global dynamics, which can induce significant disruptions in the variables.

Consequently, the study utilized tests allowing for structural breaks to enhance the robustness of the analyses. The investigation aimed to uncover the long-term relationship between foreign direct investment and democracy , a critical indicator of economic development for emerging markets in recent years. The model developed for examining the relationship between democracy and foreign direct investment within the specified sample and data range is represented by Eq.  1 :

In the model, cross-section data is represented by i  = 1, 2, 3,…. N , while the time dimension is represented by t  = 1, 2, 3,….. T , and the error term is by ɛ.

The study’s model setup and variables were adapted from Yusuf et al. ( 2020 ), Putra and Putri ( 2021 ), and Lacroix et al. ( 2021 ) in the literature. Figure  1 shows the research design.

Research design

Table 3 shows the variables and data sources used in the model.

The study designated foreign direct investment (FDI), denoted as LNFDI, as the dependent variable. The independent variable was conceptualized as the democracy variable (DEMOC). To account for potential influencing factors, inflation (INF) and per capita income (PGDP) variables, known to impact FDI, were introduced into the model as control variables to draw upon insights from the existing literature. In the context of panel data analyses, selecting control variables involves consulting the literature to identify factors with substantial influence on the dependent variable. When examining factors impacting foreign direct investment (FDI), a frequently encountered category comprises various macroeconomic variables, among which inflation and per capita income are recurrently employed. Given the study’s sample composition—comprising the BRICS-TM countries—these two variables were incorporated into the model as control variables. This decision was motivated by their recurrent utilization in the literature and their direct relevance to foreign direct investments and production costs. Furthermore, the inclusion of these variables addressed a shared data constraint.

During the data collection phase, the study utilized indices reflecting “political rights” and “civil liberties,” which were acknowledged indicators of “democracy” in the literature. These indices, sourced from the Freedom House Database ( 2020 ), were incorporated into the analysis by calculating their means, which were then used as values for the democracy variable. This approach aligns with the practices of several researchers in the existing literature, such as Kebede and Takyi ( 2017 ), Doucoligaos and Ulubasoglu ( 2008 ), and Tavares and Wacziarg ( 2001 ), who have employed this index. The index operates on a scale from 1 to 7, where 1 represents the highest state of democracy and 7 corresponds to the lowest state. To facilitate analyses, calculations, and interpretation, the index values were scaled to ensure a range between 0 and 100.

Freedom House assesses the degree of democratic governance in 29 countries from Central Europe to Central Asia through its annual “Nations in Transit” report. The democracy score encompasses distinct ratings on various facets, including national and local governance, electoral processes, independent media, civil society, judicial framework and independence, and corruption. Most researchers (Dolunay et al., 2017 ; Martin et al., 2016 ; Osiewicz & Skrzypek, 2020 ; Steiner, 2016 ) frequently utilize the data provided by Freedom House in their studies. In addition to the independent variable of democracy (DEMOC), the model integrates control variables influencing FDI. Capitation (LNPGDP) and inflation (INF) variables were incorporated within this framework. A review of the existing literature reveals that factors affecting FDI, including inflation and per capita income, have been employed in models by researchers (Botric & Skuflic, 2005 ; Chakrabarti, 2001 ; Jadhav, 2012 ; Ranjan & Agraval, 2011 ; Vijayakumar et al., 2010 ).

In the literature, various variables such as “trade openness, level of human capital, unemployment rates, government supports, tax costs,” which are believed to influence foreign capital, are employed as control variables in models. On the other hand, in some research, the impact of institutional quality, such as democracy and governance, on environmental quality is studied. Within this frame, Shahbaz et al. ( 2023 ) found that “institutional quality variables impacted environmental quality differently. In this sense, it is detrimental for policymakers to consider concerted measures to decrease institutional vulnerabilities and reduce the level of the informal economy.” However, in this study, inflation and per capita income variables were chosen due to their prominence as the most frequently used variables in the literature (detailed in the “ Theoretical Frame and Literature Review ” section) and their comprehensive impact on foreign direct capital in terms of macroeconomics.

Furthermore, a shared data problem is evident in all variables from 1994 to 2018 for the BRICS-TM country sample group, particularly in variables other than the control variables in the model. Nevertheless, these issues have yet to be encountered as inflation and per capita income variables are comprehensive and fall within general macroeconomic data. Additionally, including many control variables in the model might obscure the significance of the effect on the dependent variable in hypothesis tests examining the relationship between democracy and foreign direct investment. Consequently, real GDP data, rather than nominal, were utilized in the analysis, and the logarithm of the data was represented as LNGDP.

As explored earlier, foreign investors prioritize economic freedom over political freedom when making investment decisions (Mathur & Singh, 2013 ). In this context, the assurance of economic liberty and the legal protection of property rights may be linked to the level of democracy, particularly in developed countries. This condition explains why the relevant variables should be incorporated into the model and tested. The logarithm of FDI (LNFDI) and per capita income (LNPGDP) variables were employed in the analyses. The rationale behind the logarithmic transformation lies in its capacity to facilitate the interpretation of analysis results and standardize variables on a specific scale. Additionally, taking logarithms of series does not result in information loss in data; it also aids in mitigating autocorrelation issues and allows the series to exhibit a normal distribution.

Econometric Method

The primary motivation behind the conducted study is to investigate the impact of the variable “democracy” on foreign direct investments through newly developed panel data analysis tests that allow for structural breaks, which are not commonly used in political science. In this regard, the study aims to be one of the pioneering works testing the relationship between variables related to political science and economics with an interdisciplinary perspective through innovative empirical studies. The methodological framework of this study, which analyzes the relationship between democracy and FDI through annual data from the 1994–2018 periods using panel data analysis and causality test, is outlined below:

Graphical representation of variables and analysis of descriptive statistics,

CD lm1 (Breusch & Pagan, 1980 ), CD lm1 , and LM adj tests (Pesaran et al., 2008 ) were used in the analysis to find the presence of cross-section dependence of variables.

Panel LM test (Im, Lee, & Tieslau, 2010 ) determined whether variables in the model have a unit root.

Delta test (Pesaran & Yamagata, 2008 ) was used to determine the homogeneity or heterogeneity of variables.

Cointegration test with multiple structural breaks (Westerlund & Edgerton, 2008 ) was conducted to determine the presence of cointegration between variables.

Kónya’s causality test (Kónya, 2006 ) was conducted to investigate the existence of causal relationships between variables.

In terms of methodology, the study aims to address a significant gap in the literature on democracy. Given the chosen sample group and the specified period, it becomes evident that structural changes must be considered in the analysis because the variables of democracy and foreign direct investment are particularly susceptible to global developments, leading to substantial shifts in the markets. A literature review indicates a preference for general country-based time series analyses over new-generation tests, with classical panel data analyses commonly employed for the selected country group. In summary, an examination of the literature reveals that studies on this issue predominantly rely on first- and second-generation linear panel data analysis techniques. Therefore, incorporating unit root and cointegration tests is crucial in significantly contributing to the literature, particularly by acknowledging and addressing structural breaks in the study. Additionally, it aligns with the theoretical framework that variables such as democracy and foreign direct capital investments, susceptible to the influence of global developments, are prone to structural changes. Consequently, employing panel data analysis techniques with structural breaks gains significance and enhances the motivation and scientific robustness of the study, mainly when a substantial data range is available.

The study focuses on the BRICS-TM countries: Brazil, Russia, India, China, South Africa, Türkiye Footnote 1 (Turkey), and Mexico . These nations have gained prominence in the global economy, and their strategic significance is anticipated to grow. The selection of this sample group is based on their demonstrated high performance and potential to attract substantial foreign direct investment globally. The study’s unique contribution lies in its examination of the impact of the democracy variable on foreign direct investments within this specific country group, employing innovative techniques not commonly found in the existing literature. Furthermore, the potential increase in foreign direct investment within these countries is expected to influence national and per capita incomes positively. The continuous enhancement of economic well-being and the rising accumulation of foreign direct investments could position these countries as new focal points of attraction in the medium and long term, fortifying their appealing characteristics.

Descriptive Statistics and Graphical Analysis of Variables

Graphical analyses provide valuable insights into the changes and fluctuations of variables over the years in econometric studies. The visual representation and interpretations of the study variables are presented in Fig.  2 .

Graphical representation of variables

The graphical analysis reveals the trend and volatility of FDI over the study period (1994–2018). Peaks and troughs may indicate significant events or economic shifts influencing FDI.

Democracy index: The graphical representation illustrates the changes in the democracy index across the selected countries. Distinct patterns or shifts may be observed, indicating periods of democratic development or regression.

Inflation (INF): The inflation variable is depicted graphically, highlighting its trajectory over the analyzed years. Fluctuations in inflation rates may correlate with economic events impacting FDI.

Per capita income (PGDP): The per capita income variable is visually presented, demonstrating its variations and trends. Per capita income changes can influence countries’ attractiveness for foreign investments.

These graphical analyses serve as a foundation for understanding the dynamics of the variables under investigation and provide a visual context for further econometric interpretations.

So Fig.  2 provides a comprehensive overview of the variables examined in the study. The following key observations can be made:

Foreign direct investment (FDI): China stands out as the leader in attracting the highest FDI among the BRICS-TM countries. South Africa exhibits the lowest FDI levels in the sample group.

Democracy index: China also holds the highest score in the democracy index, indicating its position as the most democratic among the selected countries. South Africa, on the other hand, has the lowest democracy index score.

Per capita income (PGDP): Russia demonstrates the highest per capita income among the countries, suggesting a relatively higher economic well-being. India, conversely, has the lowest per capita income in the sample group.

Inflation (INF): Russia and Türkiye experience the highest inflation rates, while other countries exhibit fluctuating patterns at lower and similar levels.

Table 4 provides a detailed overview of the descriptive statistics for the variables under consideration. The following key statistics offer insights into the central tendencies and variations within the sample group.

The analysis of the basic descriptive statistics in Table  4 yields several noteworthy findings:

Kurtosis values: The INF variable stands out with a kurtosis value exceeding 3, indicating a sharp peak and heavy tails in its distribution. All other variables exhibit kurtosis values below 3, suggesting relatively normal distributions without excessively heavy tails.

Skewness values: LNFDI and LNPGDP variables display negative skewness values, suggesting a longer left tail in their distributions. DEMOC and INF variables exhibit positive skewness values, indicating longer right tails in their distributions.

Jarque–Bera test: The Jarque–Bera test results indicate that the variables are statistically significant and deviate from a normal distribution. This departure from normality suggests that certain factors or events influence the distributions of the variables.

These findings provide insights into the shapes and characteristics of the variable distributions. As indicated by skewness and kurtosis values, the deviations from normality suggest that the variables may be subject to specific influences or events, contributing to their non-normal distributions. Researchers should consider these distributional characteristics when interpreting the results and drawing conclusions from the dataset.

Cross-section Dependence Test

The escalating interdependence among countries in global economies has rendered them susceptible to the impact of positive or negative developments in one nation affecting others. This phenomenon directly results from the deepening global integration associated with globalization. Consequently, econometric studies must incorporate cross-section dependence tests to gauge the extent of interaction between nations. Such tests aim to quantify how a shock in one country reverberates across borders, influencing other countries of the global economic landscape.

Studies addressing cross-section dependency (Andrews, 2005 ; Pesaran, 2006 ; Phillips & Sul, 2003 ) emphasize that failing to account for cross-section analysis may lead to biased and inconsistent results. Thus, all analyses should consider cross-sectional dependence in relevant studies (Breusch & Pagan, 1980 ; Pesaran, 2004 ).

The tests used to determine cross-section dependence were as follows:

When the time dimension is greater than the cross-section dimension ( T  >  N ), analyses were conducted using Breusch and Pagan’s ( 1980 ) CD lm1 test.

In cases when the time dimension is equal to the cross-section dimension ( T  =  N ), the CD lm2 test (Pesaran, 2004 ) was used to conduct analyses.

In cases when the time dimension was smaller than the cross-section dimension ( T  <  N ), analyses were conducted by CD lm test (Pesaran, 2004 ).

In cases when the time dimension is both smaller and greater than the cross-section dimension, analyses were conducted (LM adj ) test (Pesaran et al., 2008 ).

This study’s analysis focuses on the relationship between democracy and FDI across BRICS-TM countries, involving seven countries. With annual data spanning 1994–2018, the cross-section dimension is denoted by N  = 7 and the time dimension by T  = 25. Given that T  >  N , the study utilized the CD lm1 test (Breusch & Pagan, 1980 ) and CD lm1 and LM adj tests (Pesaran et al., 2008 ).

Given that T  >  N for the countries and time dimension, the decision-making is informed by the results of the CD lm1 and LM adj tests. Notably, LM adj test results were prioritized, considering the potential bias in cross-section dependency tests associated with the CD lm1 test. The findings of the cross-section dependence tests are presented in Table  5 .

Upon reviewing Table  5 , it is evident that the probability values for all variables are less than 0.01. Consequently, based on the LM adj test results, the null hypothesis stating “there is no dependence between sections” is rejected, while the alternative hypothesis suggesting “cross-section dependence between sections” is accepted.

The outcomes of the tests align with the characteristics of the contemporary global landscape, where any impactful event or development in one of the BRICS-TM countries has reverberations across others. Whether positive or negative, changes in one BRICS-TM nation can influence others, particularly in areas related to foreign direct investment (FDI) and democracy. As a result, policymakers in these countries should craft their future strategies with a keen awareness of this interconnectedness and the potential spillover effects on FDI and democracy. Indeed, the obtained result is consistent with theoretical expectations. The observed interdependence and influential power of the BRICS-TM country group align with the current dynamics of the globalized world. Their growing significance in the world economy and their strategic importance reinforces the decision that developments within these countries have substantial implications beyond their borders. This outcome urges the need for a nuanced approach to respond to the interconnected nature of these nations in the contemporary global landscape.

Panel Unit Root Test

In the initial phase of the econometric analysis, the stationarity of the variables in the models was determined through unit root analyses to address the spurious regression problem. Accurate results cannot be obtained when a unit root is present in a series of variables (Granger & Newbold, 1974 ). In panel data analysis, the primary consideration in stationarity tests is whether the countries are independent of each other or not. Unit root tests in panel data analysis comprise first- and second-generation tests, each with distinct characteristics. The first generation of unit root tests is further divided based on the homogeneity and heterogeneity assumptions of the countries. Some authors conducted tests under the homogeneity assumption (Breitung, 2005 ; Hadri, 2000 ; Levin et al., 2002 ), while some others pursued their analysis under the heterogeneity assumption (Choi, 2001 ; Im et al., 2003 ; Maddala & Wu, 1999 ).

Additionally, second-generation tests incorporate cross-section dependency into their analyses, whereas first-generation tests do not account for it. Given the dynamics of the global world, the use of second-generation tests in the literature is deemed more beneficial, as it is more realistic to assume that other countries will be affected by a shock experienced by one of the countries in the panel. Panel unit root tests have gained broader acceptance in time series analysis due to their ability to provide more meaningful results than standard stationarity tests. In recent years, there has been a preference for tests that allow for structural breaks, especially in series sensitive to economic variations such as foreign trade, exchange rates, and foreign capital. Hence, this study utilized panel unit root tests that consider structural breaks to assess the stationarity of variables susceptible to cyclical fluctuations, including democracy, inflation, per capita income, and FDI. Conducting stationarity tests without accounting for structural breaks can yield misleading results, making panel LM unit root tests with structural breaks the method of choice for this study.

The panel LM test (Im, Lee, & Tieslau, 2010 ) examines series in models with a level and trend, considering single and two breaks. In this study, analyses with a single break were preferred due to the shortness of the specified time interval and the events expected to cause breaks in the given period. The LM test statistics were employed to assess the hypothesis of “there is a unit root” (ϕ i  = 0). Compared to others, a distinctive feature of this test is its allowance for different breaking times for different countries. Moreover, it permits a structural break under both zero and alternative hypotheses, providing an additional advantage. The asymptotic distribution of the test follows the standard normal distribution, and it remains unaffected by the presence of a structural break. Table 6 presents the stationarity analysis results of the series for seven countries based on the model allowing breaks in level.

The analysis of Table  6  yields the following observations:

In unit root models allowing for a constant break, it is evident that all variables in the panel become stationary when their differences are calculated. In other words, since the series are stationary for the entire panel at the I(1) level, the necessary conditions for cointegration tests are met. The cointegration test indicates that global and local developments in countries cause structural breaks when considering these break dates.

On a country basis, the following conclusions can be drawn from Table  6 :

For the series whose differences are calculated, the FDI variable is stationary at the level value in Russia and India, while the same variable is stationary in India and Türkiye.

The per capita income variable is stationary at a level value only in Türkiye. However, the same variable is stationary in Brazil, India, and Türkiye for the series whose differences are computed.

The inflation variable is stationary at the level value in South Africa and Mexico. However, the same variable is stationary for the series whose differences are computed in Brazil, Russia, and China.

The democracy variable is stationary at the level value in Brazil, South Africa, and Türkiye. However, the variable is stationary in Brazil, Türkiye, and Mexico for the series whose differences are computed.

Table 7 shows the stationarity analysis results of seven countries based on the model that allows breaks in level and trend.

The results in Table  7 can be analyzed based on the following points:

General panel evaluation: Foreign direct investment (FDI) and per capita income variables are stationary at the level values when the panel is considered whole. Taking the difference of these variables increases the degree of stationarity. Inflation and democracy variables, among the other variables in the model, are stationary in the series when the difference is taken. However, they exhibit unit root characteristics at the level values. Overall, all series are stationary at the I(1) level with structural breaks for the entire panel. This suggests that the necessary conditions for the cointegration test are met. The dates of structural breaks indicate that social, political, and economic developments may have caused these breaks in the BRICS-TM countries included in the sample . These findings imply that significant events and changes in the socio-political and economic landscape of the BRICS-TM countries likely influence the structural breaks in the series.

Results from Table  7 can be interpreted on a country-specific basis as follows:

Brazil: FDI and per capita income are stationary at the level value. Inflation is stationary at the level, while democracy is stationary at the difference.

Russia: FDI and per capita income are stationary at the level value. Inflation is stationary at the level, while democracy is stationary at the difference.

India: FDI is stationary at the level value. Per capita income is stationary at the level, while inflation and democracy are stationary at the difference.

China: FDI is stationary at the difference. Per capita income is stationary at the level, while inflation and democracy are stationary at the difference.

South Africa: FDI is stationary at the level value. Per capita income is stationary at the level, while inflation and democracy are stationary at the difference.

Türkiye: FDI is stationary at the level value, per capita income is stationary at the level, and inflation and democracy are stationary at the difference.

Mexico: FDI is stationary at the difference. Per capita income is stationary at the level, while inflation and democracy are stationary at the difference.

These country-specific findings indicate variations in the stationarity characteristics of the variables, highlighting the importance of considering individual country dynamics in the analysis. The results of the panel unit root tests, both with and without structural breaks, provide insights into the stationarity of the variables. The interpretation suggests that a shock to one of the countries included in the model can lead to permanent effects that do not dissipate immediately. As confirmed by the tests, the non-stationarity of the series establishes the necessary condition for cointegration tests.

Moreover, when the same tests are conducted by taking the first-order differences of all series to achieve stationarity, it is observed that the variables become stationary at the I(1) level. This indicates that the variables are integrated in the first order, aligning with theoretical expectations. The I(1) characteristic implies that the variables exhibit a tendency to return to equilibrium after a shock, supporting the notion of long-run relationships among the variables.

Homogeneity Test of Cointegration Coefficients

The homogeneity of coefficients plays a crucial role in determining the relationship between variables in panel data studies. It helps organize subsequent tests used in the analysis. The homogeneity test examines whether the change in one country is affected at the same level by other countries. Coefficients are expected to be homogeneous in models for countries with similar economic structures, while they may be heterogeneous for countries with different economic structures. Pesaran and Yamagata ( 2008 ) developed the delta test based on Swamy ( 1970 ) to determine whether the slope parameters of cross-sections are homogeneous. The null hypothesis for this test is “slope coefficients are homogeneous.” Homogeneity, in the context of panel data analysis, implies that the coefficients of the slopes are the same for all units or entities within the panel. On the other hand, heterogeneity indicates that, at least in one of the entities, the slope coefficients differ from those in the rest of the panel. Testing for homogeneity helps assess whether the relationship between variables is consistent across all units or if there are significant variations.

As seen in Table  8 , the delta homogeneity test was performed to determine whether the slope coefficients of the model differ between units.

The delta test results indicate that the slope coefficients vary between units in the long term, given that the probability values for both test statistics are smaller than 0.05, as presented in Table  8 . This result suggests that the variables exhibit heterogeneity, implying that the relationships between variables are inconsistent across all units over the long term. The obtained result aligns with expectations and is consistent with the theory, indicating that the countries within the BRICS-TM sample exhibit different structures, and the coefficients are heterogeneous. This result suggests that the relationship between variables varies across these countries, emphasizing the sample group’s diverse economic characteristics and behaviors.

Panel Cointegration Test with Structural Break

Different methods are employed to determine the existence of long-term cointegration among the model’s variables. One set of methods is first-generation tests, which do not require cross-section dependence. The second set includes second-generation tests that consider cross-section dependence but do not incorporate structural breaks (Koç & Sarica, 2016 ). To obtain realistic and unbiased results, it is crucial to conduct tests that take structural breaks into account in cointegration analyses. Therefore, the panel cointegration test-PCWE (Westerlund & Edgerton, 2008 ) was employed, given that the series is stationary at the I(1) level.

PCWE was developed based on unit root tests that utilize Lagrange multiplier (LM) statistics, obtained from multiple repetitions (bootstrap). The merits of this test can be succinctly summarized as follows (Koç & Sarica, 2016 ; Göçer, 2013 ):

It takes into account cross-section dependency and structural breaks.

It accommodates heteroscedasticity and autocorrelation.

It identifies breaks at different dates for each country in terms of both constants and slopes.

Potential inherent problems in the model can be addressed with fully adjusted least squares estimators.

This test is effective in yielding reliable results even with small sample sizes.

This study opted for PCWE tests, given their robust characteristics. Additionally, considering the limited number of countries in the sample and the anticipation of few structural breaks in the specified period, the PCWE test was the preferred choice. As depicted in Table  9 , the determination of statistically significant cointegration between variables is made based on the significance levels of the probability values.

As indicated in Table  9 , cointegration is observed at a 5% significance level in the regime change model and a 1% significance level in the model without a break. The presence of cointegration suggests a long-term relationship between the variables of democracy and FDI in BRICS-TM. In simpler terms, democratic developments and FDI are correlated over the long run, indicating a balanced relationship between them. Future researchers may explore the direction of these variables across different samples. This study specifically tested the existence of a long-term relationship between FDI and democracy, and the inclusion of structural breaks was found to be significant. Governments and decision-makers, particularly in developing countries like BRICS-TM, should consider the relationship between democracy and FDI by taking structural breaks into account to attract foreign investment effectively. Therefore, it is emphasized that “any development related to democracy has the potential to influence FDI, and considering this factor is beneficial in the formulation and implementation of socio-economic policies.” No cointegration is observed in the “change at level” model. Indeed, the obtained results align with the study’s hypothesis. Considering the periods of structural breaks in the countries within the sample, it becomes evident that a long-term relationship exists between the variables incorporated into the model. This issue underscores the importance of considering not only the overall relationship between democracy and FDI but also the specific historical contexts and transitions in individual countries that might contribute to this relationship.

Regarding structural breaks in countries in the sample within the scope of cointegration in the regime change model, local and global developments, in general, cause breaks. The reasons for structural break dates in the sample countries are given in Table  10 .

The following items can be aligned with the breaking dates provided in Table  10 :

A recovery in macroeconomics and positive expectations toward agreements with the IMF became prominent after Russia’s transition economies in 1996.

2000 in Brazil is known as the period when the rapid growth trend started after passing the targeted inflation after the 1999 Russian Crisis.

Membership of China in the International Trade Union was evaluated as an essential development in the global economy in 2001.

Experiencing the biggest crisis in history in Türkiye in 2002 and starting a dominant single-party regime were remarkable developments.

The 2005 Election results in Mexico and the hurricane disasters, including an 8.7-magnitude earthquake, created significant socio-economic problems that year.

The ANC party’s coming to power alone in South Africa in 2009 was commented on as a consistent process for the national and regional economy; this situation also removed a series of uncertainties.

The devaluation experienced in India in 2016 has created a significant break.

Of course, the impact of such structural breaks should be considered. Toguç et al. ( 2023 ) argued that “differentiating these short-term and long-term effects has implications for risk management and policymaking.” Since structural break increases risks and uncertainty, foreign capital prefers to invest in other destinations.

Kónya’s Causality Test

This test (Kónya, 2006 ) investigates the existence of causality between variables using the seemingly unrelated regression (SUR) estimator (Zellner, 1962 ). One advantage of this test is that the causality test can be applied separately to the countries that make up the heterogeneous panel. Another important advantage is that it is unnecessary to apply unit root and cointegration tests, as country-specific critical values are produced. According to the test results, if the Wald statistics calculated for each country are greater than the critical values at the chosen significance level, the null hypothesis of “no causality between the variables” is rejected. In other words, a Wald statistic greater than the critical value indicates that there is causality between the variables.

The Kónya causality test results provided in Table  11 revealed a causality from democracy (DEMOC) to FDI at a 1% significance level in Mexico, 5% in China, and 10% in Russia. In addition, from FDI to democracy (DEMOC), there is causality at a 5% significance level in Mexico and a 10% significance level in Russia.

According to the results in Table  12 for the causality between foreign direct investment (FDI) and PGDP, the Kónya causality tests revealed a one-way causality from PGDP to FDI at a 10% significance level in Mexico.

According to the results provided in Table  13 for the causality between foreign direct investment (FDI) and inflation (INF), the results of the Kónya causality tests revealed a one-way causality from inflation to FDI at a 10% significance level in Türkiye and, conversely, a one-way causality from FDI to inflation at a 10% significance level in South Africa.

The study investigated the nexus between democracy and foreign direct investment (FDI) using annual data from a sample of seven countries within emerging markets from 1994–2019. According to cross-section dependence test results, all variables’ probability values were less than 0.01, indicating significant cross-section dependence. The rejection of the null hypothesis, stating “there is no dependence between sections” in favor of the alternative hypothesis suggesting “there is cross-section dependence between sections,” aligns with the contemporary global landscape. In today’s interconnected world, any impactful event or development in one of the BRICS-TM countries has reverberations across others, particularly in areas related to FDI and democracy. These findings underscore the imperative for governments and policymakers in these countries to craft future strategies with a keen awareness of this interconnectedness and the potential spillover effects on FDI and democracy.

Furthermore, the outcomes of the panel unit root test indicate that all variables in the panel become stationary at the I(1) level when their differences are calculated, meeting the necessary conditions for cointegration tests. This result suggests that global and local developments in countries cause structural breaks when considering these break dates. Variations in stationarity characteristics of variables were observed on a country basis, highlighting the importance of considering individual country dynamics in the analysis.

The delta homogeneity test results suggest that the variables exhibit heterogeneity, implying that the relationships between variables are inconsistent across all units over the long term. This aligns with expectations and emphasizes the diverse economic characteristics and behaviors within the sample group of BRICS-TM countries.

The Westerlund-Edgerton cointegration test results reveal significant cointegration between variables, observed at a 1% significance level in the model without a break and a 5% level in the regime change model. This result signifies a sustained relationship between FDI and democracy in BRICS-TM countries over the long term. Future researchers may explore the direction of these variables across different samples, while governments and decision-makers should consider this relationship, particularly in developing countries, to attract foreign investment effectively.

Kónya’s causality test results also provided significant causality between some of the variables in some countries within the sample group. Firstly, there is a causality from democracy (DEMOC) to FDI in Mexico (1% significance level), in China (5% significance level), and in Russia (10% significance level). Secondly, there is also a significant causality from FDI to democracy (DEMOC) in Mexico (5% significance level) and in Russia (10% significance level). Thirdly, a one-way causality could only be found from PGDP to FDI in Mexico (10% significance level). Fourthly, there is also a one-way causality from inflation to FDI in Türkiye (10% significance level) and a one-way causality from FDI to inflation in South Africa (10% significance level). Thus, Kónya’s causality test results supported the hypothesis of the research with significant results.

In conclusion, the empirical findings establish a statistically significant and robust relationship between the level of democracy and the flow of FDI in BRICS-TM countries. These findings underscore the intertwined nature of political and economic dynamics within these nations and highlight the importance of considering both aspects in policy formulation and decision-making processes.

The relationship between the democracy level and foreign direct investment (FDI) of BRICS-TM countries is an area that requires further exploration. Subsequently, comparing the findings of this study with those of previous research reveals its significance. While earlier studies predominantly concentrated on the preferences of host countries in attracting foreign investment, few delved into the factors influencing foreign investors’ choices. A notable exception is by Li and Resnick ( 2003 ), who highlighted the pivotal question of “Why do companies invest in foreign countries?” and proposed a theory positing that “democratic institutions impact FDI flow in both positive and negative ways” (Li & Resnick, 2003 :176). Their conclusions from data analysis of 53 developing countries spanning 1982–1995 align with the current study’s outcomes. Specifically, they found that (1) advancements in democracy lead to heightened property rights protection, fostering increased FDI inflows, and, (2) conversely, democratic improvements in underdeveloped nations result in diminished FDI flows. These findings correspond with our study, given that the sampled countries are a mix of developing and developed nations, mirroring the first scenario described by Li and Resnick.

Derbali et al. ( 2015 ) concluded in a similar vein in their study, examining a massive dataset spanning from 1980 to 2010 with 173 countries, 44 of which underwent democratic transformation. Their observation that “variables related to human development and individual freedom initiate the democratic transformation process, contrary to the social heterogeneity variable” aligns with the results of the present study when interpreted in reverse. This scenario prompts a chicken-and-egg question: Does the level of democracy positively influence the flow of FDI, or does FDI flow positively impact the level of democracy? The authors tackled this issue in the second stage of their analysis and determined that democratic transformation leads to a substantial increase in FDI inflows. Our findings corroborate this perspective with evidence from a different sample group of countries.

Malikane and Chitambara ( 2017 ) concluded in their study analyzing the relationship between FDI, democracy, and economic growth in eight South African countries from 1980 to 2014 that the FDI variable exhibits a direct and positive impact on economic development, explicitly implicating that strong democratic institutions serve as notable drivers of economic growth. Their findings suggest that the effect of FDI on economic growth is contingent on the level of democracy in the host country. In another study on developing countries, Khan et al. ( 2023 ) found that specific determinants of good governance, such as control of corruption, political stability, and voice and accountability, significantly attract FDI inflows. However, other determinants, including government effectiveness, regulatory quality, political system, and institutional quality, significantly reduce FDI inflows. On the contrary, they found that in Asian countries, all institutional quality indicators except control of corruption have a significant and positive effect on FDI inflows (Khan et al., 2023 ). The significant relationships identified between these phenomena across various indicators for developing and Asian countries align with the findings of our study.

Developed and developing nations actively engage in concerted efforts to attract foreign capital investments in the contemporary global economic landscape. Foreign direct investments (FDIs) stand out as a pivotal form of investment that significantly influences a country’s growth and development trajectory. The inflow of direct foreign capital brings multifaceted contributions to a nation’s economy, encompassing vital aspects such as capital infusion, technological advancement, elevated management standards, expanded foreign trade opportunities, employment generation, sectoral discipline, access to skilled labor, and risk mitigation.

In addition to all these, foreign direct investment (FDI) holds significant importance not only in the general context of sustainability but also specifically in sustainable development. To better understand this close relationship between sustainable development and FDI, first briefly examine the concept of sustainability. Simply put, sustainability entails maintaining a favorable condition through methods that cause no harm yet are supportable, legally and scientifically verifiable, defendable, and implementable (Ratiu, 2013 ). From a developmental perspective, it signifies maintaining continuity without losing control. According to Menger ( 2010 ), sustainability can be defined as the ability to grow and survive independently. The author emphasizes that the concept of sustainability is closely related to “creativity” and “cultural vitality,” as well as being an “internally growing” and “self-sustaining” trend with innovative effects that also attract different social strata.

Within the context of all these existing barriers and dilemmas, managing the process of reducing the negative aspects while increasing and offering the positives to people must be handled with care. This intricate process, termed sustainable development, is like the search for the cosmos in chaos as it aims to balance the economic, environmental, and social dimensions of both local urban areas and regional and national areas, and even the global sphere, especially with climate change becoming one of the main negative impacts on the environmental dimension. Gazibey et al. ( 2014 ) also noted that, while some problem areas, such as “poverty reduction” are mainly related to the economic and somewhat to the social dimensions of sustainability, other issues like “climate change” and “reduction of carbon footprint” are more related to the environmental dimension. An in-depth examination reveals that many problems, which may initially seem related to a single dimension, are intertwined with multiple dimensions. Thus, while attracting foreign direct investment to a country may seem primarily related to the economic dimension at first glance, it is closely linked to environmental and social dimensions.

In its most straightforward approach, meeting and satisfying the basic needs of individuals will subsequently prioritize higher-level needs. This, in turn, will support sustainable development in all three dimensions. Thus, while foreign capital invested in a country may initially support economic sustainability, its contribution to the socio-economic levels of individuals will lay the groundwork primarily for social and educational improvement in the medium and long term, secondarily for environmental enhancement to result in a more livable environment. For example, Xu et al. ( 2024 ) argued that “China is currently exploring a sustainable development mode of collaborative governance.” In a good level of governance, all social partners expected to be affected by the possible policies are included in the decision-making process. This process is related to and supports the participation dimension of democracy. So, as the pieces of a chain, a good level of democracy supports the level of governance, and governance supports the accumulation of FDI and economic performance. Consequently, these favorable conditions might pave the way for sustainable development. Another study (Olorogun, 2023 ) found a long-run relationship between financial development in the private sector and economic growth in sub-Saharan Africa, with the data spanning from 1978 to 2019. According to the results of the author’s research, there is a long-run covariance between sustainable economic development and foreign direct investment (FDI) and a significant level of causality between economic growth and financial development in the private sector, FDI, and export.

Indeed, sustainability resembles a ball resting on a three-legged stool: Any absence or imbalance in one of this tripod’s economic, social, or environmental legs will cause the ball to fall. In other words, sustainable development requires addressing all three dimensions in a balanced manner.

This idea brings us to the focus of this research: The level of democracy and the FDI variable and the relationship between these variables essentially concerns all three dimensions. In countries with a higher level of democracy, the possibility of developing policies that consider citizens’ demands and preferences is higher than in countries with lower levels of democracy. Conversely, in countries with lower levels of democracy , the likelihood of prioritizing the preferences and gains of specific individuals or groups over issues such as sustainability, environmental protection, and social welfare is higher. Consequently, this situation will negatively affect both the potential level of FDI attracted to the less developed country and, ultimately, the sustainable development momentum.

To sum up, numerous factors play a crucial role in shaping decisions related to foreign direct investments. Particularly in underdeveloped and developing countries, where domestic capital accumulation might be insufficient, the preference for attracting direct foreign capital investments emerges as a strategic choice over external borrowing. This strategic approach is driven by fostering economic development and sustainable growth while leveraging the benefits associated with foreign capital inflows.

The empirical evidence on the relationship between democracy and the level of foreign direct investment (FDI) often presents conflicting results, influenced by variations in study periods and sample compositions. Notably, these disparities can be traced back to the differing development levels of countries under scrutiny.

Reviewing previous studies reveals a recurring pattern wherein developed countries exhibit a positive and significant correlation between democracy and FDI. Conversely, in underdeveloped or developing nations, a negative relationship tends to prevail between these two variables. This disparity hinges on the distinct behavior of capital owners seeking to invest in already developed countries, where business transactions are grounded in established legal frameworks, property rights, and the rule of law. In contrast, underdeveloped and developing countries often witness capital owners engaging in potentially illicit and unethical business dealings with high risks and potential returns.

These arrangements are frequently based on different interests and assurances with individuals and groups in positions of power. In essence, the ease of resource acquisition, processing, and exportation in underdeveloped countries becomes contingent upon the presence of authoritarian regimes. Such relationships of interest with authoritarian regimes provide investment security for global investors. However, these regimes—keen on preserving these relationships—are disinclined to have their dealings exposed, which in turn leads to increased pressure on their citizens. The resulting mutualistic relationship transforms into a lucrative exploitation process.

When the outcomes of the panel data analysis incorporating structural breaks were examined, it was found that all variables demonstrated significance at the 1% level. The cross-sectional dependency analysis results indicated a significant cross-sectional relationship between the variables. In the panel unit root test, it was observed that the variables in the model exhibited unit roots at the level, but their differences rendered all variables stationary. The delta homogeneity test findings suggested that the variables lacked homogeneity. Furthermore, the results of the panel cointegration test with structural breaks affirmed a long-term relationship, with significance levels of 1% in the model without breaks and 5% in the regime change model. Lastly, the reached bidirectional and one-directional causality between FDI and democracy and other economic variables like inflation and PGDP in the sample group countries require policymakers to focus on each variable carefully especially on the level of democracy if they aim to reach a high level of FDI.

In conclusion, the findings of this study suggest the presence of a long-term relationship between democracy and FDI also supported by causality in some countries within the sample, as revealed through the analysis of data from BRICS-TM countries within emerging markets spanning the period 1994–2018. The significance of this relationship is particularly evident when considering the impact of structural breaks. It is emphasized that governments and policymakers in emerging markets (including those in BRICS-TM), which aim to bolster their economy’s resilience against various shocks, should not only consider structural breaks but also recognize the intricate connection between democracy and FDI. The study underscores that developments in democracy have the potential to influence FDI, emphasizing the importance of factoring this relationship into the formulation and execution of socio-economic policies. Lastly, using panel tests with a structural break, a method uncommonly employed in the empirical analysis of the democracy variable, may contribute as an additional dimension to the existing literature in this field.

In analyzing the relationship between democracy and foreign direct investment, the findings suggest a long-term relationship in all models except for the level change model. These results highlight the significance of democratic developments in the BRICS-TM countries influencing the inflow of foreign direct capital. Therefore, policymakers in emerging markets, particularly within BRICS-TM countries, are encouraged to prioritize democracy and foster democratic developments to attract foreign direct investments. Additionally, given the impact of global and local developments leading to structural breaks, it becomes crucial for these policymakers to closely monitor and interpret international and global events that may affect the resilience of their national economies, both negatively and positively. By doing so, emerging markets can enhance their resilience against various shocks, enabling policymakers to adeptly prepare their economies, private sectors, and stock markets for potential global risks.

Opting for direct foreign capital investments over external debt or short-term investments is a more rational approach for developing countries to accumulate capital for their overall development. As many countries seek to address the scarcity of capital, the understanding of the contributions of foreign capital to development improves, while global competition intensifies to attract foreign capital. Therefore, policymakers should focus on enhancing macroeconomic indicators such as inflation and national income and fostering democratic development, a fundamental trust factor for foreign capital. Demographic and institutional factors also affect the global or social fiscal pressure (Nuță & Nuță, 2020 ). Thus, as an institutional factor, positive developments at the level of democracy are fundamental in attracting foreign capital.

It is crucial for developing countries to prioritize and keep pace with indicators that foreign capital considers significant. Global companies prioritize countries they can trust, where investments can swiftly yield profits due to potential risks. The foundation of democracy in developing nations starts in the family and education realms. Proper education on the importance and necessity of democracy in the curriculum contributes to long-term awareness of democracy. Developing effective education policies within families can address intra-family democracy, fostering a culture of democracy throughout the country.

The reasons listed up to this point reiterate that attracting foreign direct investments to a country is of utmost critical importance for supporting sustainable development in all aspects of the nation. As discussed in the discussion section, while sustainability may appear to be solely related to the economic dimension at first glance, an increase in foreign direct investment toward a country has the potential to indirectly and positively impact the social and environmental dimensions of sustainability as well. When considering that the level of democracy also has a similar effect on the level of FDI, it should be expected that the level of democracy in a country is strongly correlated with the issue of sustainable development.

In conclusion, new researchers interested in this subject are recommended to conduct analyses on different country groups. Updating established models and testing hypotheses using various socio-economic indicators and analysis methods can further contribute to the literature.

Data Availability

The data set is uploaded to the system as a supplementary file and also uploaded to Figshare with the https://doi.org/10.6084/m9.figshare.21701966 .

Turkey’s name changed to Türkiye: According to the United Nations (UN)-Türkiye, the country’s name has been officially changed to Türkiye at the UN upon a letter received on June 1 from the Turkish Foreign Ministry (UN-Türkiye. (2022)). Turkey’s name changed to Türkiye, URL: https://turkiye.un.org/en/184798-turkeys-name-changed-turkiye , Accessed on: 02.07.2022.

Abbreviations

Brazil, Russia, India, China, South Africa, Türkiye, Mexico

The Democracy Index variable

Ecological footprint

• Foreign direct investment

Gross domestic product

Logarithm of foreign direct investment

Logarithm of per capita income

Multinational corporations

Per capita income

Political institutions

Regression coefficient value

World Development Indicators

Ahmed, Z., Ahmad, Z., Rjoub, H., Kalugina, O. A., & Hussain, N. (2021). Economic growth, renewable energy consumption, and ecological footprint: Exploring the role of environmental regulations and democracy in sustainable development. Sustainable Development, 30 (4), 595–605. https://doi.org/10.1002/sd.2251

Article   Google Scholar  

Aliefendioğlu, Y. (2005). Temsili demokrasinin ‘seçim’ ayağı (The election leg of the representative democracy. TBB Dergisi (TBB Journal), 60 (2005), 71–96.

Google Scholar  

Andrews, D. W. K. (2005). Cross-section regression with common shocks. Econometrica, 73 (5), 1551–1585. https://doi.org/10.1111/j.1468-0262.2005.00629.x

Baghestani, H., Chazi, A., & Khallaf, A. (2019). A directional analysis of oil prices and real exchange rates in BRIC countries. Research in International Business and Finance, 50 (C), 450–456. https://doi.org/10.1016/j.ribaf.2019.06.013

Banday, U. J., & Ismail, S. (2017). Does tourism development lead to a positive or negative impact on economic growth and environment in BRICS countries? A panel data analysis. Economics Bulletin, 37 (1), 553–567.

Botric, V., & Skuflic, L. (2005). Main determinants of foreign direct investment in the Southeast European countries. Transition Studies Review, 13 (2), 359–377. https://doi.org/10.1007/s11300-006-0110-3

Breitung, J. (2005). A parametric approach to the estimation of cointegrating vectors in panel data. Econometric Reviews, 24 (2), 151–173. https://doi.org/10.1081/ETC-200067895

Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. Review of Economic Studies, 47 (1), 239–253. https://doi.org/10.2307/2297111

Busse, M. (2003). Democracy and FDI. HWWA Discussion Paper 220 . Hamburg Institute of International Economics (HWWA).

Castro, D. (2014). Foreign direct investment and democracy. The Honors Program Senior Capstone Project , Dissertation in Bryant University, May. pp.1–26. Retrieved June 10 2023, from https://digitalcommons.bryant.edu/honors_economics/18/ . Accessed 05.03.2024.

Chakrabarti, A. (2001). The determinants of foreign direct investment: Sensitivity analyses of cross-country regressions. Kyklos, 54 , 89–114. https://doi.org/10.1111/1467-6435.00142

Choi, I. (2001). Unit roots test for panel data. Journal of International Money and Finance , 20(2), 249–272. Retrieved June 10 2023, from https://doi.org/10.1016/S0261-5606(00)00048-6

Derbali, A., Trabelsi, L., & Zitouna, M. H. (2015). Democratic transition and FDI: Transition process matters. Munich Personal RePEc Archive MPRA Paper No. 77518 , posted 16 Mar 2017, 11 August, 1–38. Retrieved June 10 2023, from https://mpra.ub.uni-muenchen.de/id/eprint/77518 . Accessed 18 Jan 2024.

Dolunay, A., Kasap, F., & Keçeci, G. (2017). Freedom of mass communication in the digital age in the case of the Internet: Freedom house and the USA Example. Sustainability, 9 (10), 1739, 1–21. https://doi.org/10.3390/su9101739

Doucoligaos, H., & Ulubasoglu, M. A. (2008). Democracy and economic growth: A meta-analysis. American Journal of Political Science, 52 (1), 61–83. https://doi.org/10.1111/j.1540-5907.2007.00299.x

Erdoğan, S., Yıldırım, D. Ç., & Gedikli, A. (2019). Investigation of causality analysis between economic growth and CO2 emissions: The case of BRICS – T countries. International Journal of Energy Economics and Policy, 9 (6), 430–438. Retrieved June 10 2023, from https://doi.org/10.32479/ijeep.8546

Fernandes, G. W., de Oliveira Roque, F. O., Fernandes, S., de Viveiros Grelle, C. E., Ochoa-Quintero, J. M., Toma, T. S. P., Vilela, E. F., & Fearnside, P. M. (2023). Brazil’s democracy and sustainable agendas: A nexus in urgent need of strengthening. Perspectives in Ecology and Conservation, 21 (3), 197–199. https://doi.org/10.1016/j.pecon.2023.06.001

Freedom House. (2020). Democracy scores , Retrieved April 25 2022, from https://freedomhouse.org/report/freedom-world . Accessed 12.10. 2023.

Gazibey, Y., Keser, A., & Gökmen, Y. (2014). Türkiye’de illerin sürdürülebilirlik boyutlari açisindan değerlendirilmesi (The evaluation of the cities in Türkiye according to the dimensions of sustainability). Ankara University SBF Journal, 69 (3), 511–541.

Göçer, İ. (2013). Ar-Ge Harcamalarının Yüksek Teknolojili Ürün İhracatı, Dış Ticaret Dengesi ve Ekonomik Büyüme Üzerindeki Etkileri (Effects of RandD expenditures on high technology exports, balance of foreign trade and economic growth). Maliye Dergisi, 165 , 215–240. Retrieved June 10 2023, from https://www.researchgate.net/publication/296621402_Ar-Ge_Harcamalarinin_Yuksek_Teknolojili_Urun_Ihracati_Dis_Ticaret_Dengesi_ve_Ekonomik_Buyume_Uzerindeki_Etkileri

Granger, C. W. J., & Newbold, P. (1974). Spurious regressions in econometrics. Journal of Econometrics, 2 (2), 111–120. https://doi.org/10.1016/0304-4076(74)90034-7

Gür, B. (2020). The effect of foreign trade on innovation: The case of BRICS-T countries. Journal of Social, Humanities and Administrative Sciences, 6 (27), 819–830. Retrieved June 10 2023, from https://www.researchgate.net/publication/339847375_The_Effect_of_Foreign_Trade_on_Innovation_The_Case_of_BRICS-T_Countries . Accessed 25 Mar 2024.

Hadri, K. (2000). Testing for stationarity in heterogeneous panels. Econometrics Journal, 3 (2), 148–161. Retrieved June 10 2023, from https://doi.org/10.1111/1368-423X.00043

Haggard, S. (1990). Pathways from the periphery: The politics of growth in the newly industrializing countries . Cornell University Press.

Harms, P., & Ursprung, H. (2002). Do civil and political repression boost FDI? Economic Inquiry, 40 (4), 651–663. https://doi.org/10.1093/ei/40.4.651

Haydaroğlu, C., & Gülşah, Ç. (2016). Türkiye’de seçim sistemlerinin demokrasi ve ekonomi ilişkisi çerçevesinde incelenmesi. Uluslararası Politik Araştırmalar Dergisi, 2 (1), 51–63. https://doi.org/10.25272/j.2149-8539.2016.2.1.05

Im, K.S., Lee, J., & Tieslau, M. (2010). Panel LM unit root tests with trend shifts (March 1, 2010). FDIC Center for Financial Research Working Paper, No. 2010–1 . https://doi.org/10.2139/ssrn.1619918

Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115 (1), 53–74. https://doi.org/10.1016/S0304-4076(03)00092-7

Jadhav, P. (2012). Determinants of foreign direct investment in BRICS economies: Analysis of economic institutional and political factor. Social and Behavioral Sciences, 37 , 5–14. https://doi.org/10.1016/j.sbspro.2012.03.270

Kebede, J. G., & Takyi, P. O. (2017). Causality between institutional quality and economic growth: Evidence from sub-Saharan Africa. European Journal of Economic and Financial Research, 2 (1), 114–131. https://doi.org/10.5281/zenodo.438146

Keser, A., Kılıç, B., & Özbek, C.A. (2023). How the Demos [public] regulate the Kratos [administration] through repeated elections: Lessons learned from the elections in Türkiye for the government and opposition. İnsan Ve Toplum , 13(4), 66–93. https://doi.org/10.12658/M0704

Khan, H., Dong, Y., Bibi, R., & Khan, I. (2023). Institutional quality and foreign direct investment: Global evidence. Journal of the Knowledge Economy . https://doi.org/10.1007/s13132-023-01508-1

Kilci, E. N., & Yilanci, V. (2022). Impact of monetary aggregates on consumer behavior: A study on the policy response of the federal reserve against COVID-19. Asian Journal of Applied Economics, 29 (1), 100–122. Retrieved June 10 2023, from https://so01.tci-thaijo.org/index.php/AEJ/article/view/248476 . Accessed 21 Apr 2024.

Koç, A., & Sarica, D. (2016). Analysis on the relationship between the share of labour income and the level of union organization in selected OECD countries in the neoliberal era. Journal of Current Researches on Business and Economics, 6 (2), 29–56. Retrieved June 10 2023, from https://www.jocrebe.com/imagesbuyuk/0d2436-2-say%C4%B1%20tam%20dosyas%C4%B1.pdf . Accessed 14 Apr 2024.

Kónya, L. (2006). Exports and growth: Granger causality analysis on OECD countries with a panel approach. Economic Modelling, 23 (6), 978–992. https://doi.org/10.1016/j.econmod.2006.04.008

Lacroix, J., Meon, P. G., & Sekkat, K. (2021). Democratic transitions can attract foreign direct investment: Effect, trajectories, and the role of political risk. Journal of Comparative Economics, 49 (2), 340–357. https://doi.org/10.1016/j.jce.2020.09.003

Levin, A., Lin, C. F., & Chu, C. J. (2002). Unit root tests in panel data: Asymptotic and finite sample properties. Journal of Econometrics, 108 , 1–24. https://doi.org/10.1016/S0304-4076(01)00098-7

Li, Q., & Resnick, A. (2003). Reversal of fortunes: Democratic institutions and FDI inflows to developing countries. International Organization, 57 (1), 175–211. https://doi.org/10.1017/S0020818303571077

Maddala, G. S., & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61 , 631–652. https://doi.org/10.1111/1468-0084.0610s1631

Magazzino, C. (2023). Ecological footprint, electricity consumption, and economic growth in China: Geopolitical risk and natural resources governance. Empirical Economics . https://doi.org/10.1007/s00181-023-02460-4

Magazzino, C., & Mele, M. (2022). Can a change in FDI accelerate GDP growth? Time-series and ANNs evidence on Malta. The Journal of Economic Asymmetries, 25 , e00243. https://doi.org/10.1016/j.jeca.2022.e00243

Magazzino, C., & Mele, M. (2022). A new machine learning algorithm to explore the CO2 emissions-energy use-economic growth trilemma. Annals of Operations Research . https://doi.org/10.1007/s10479-022-04787-0

Malikane, C., & Chitambara, P. (2017). FDI, democracy, and economic growth in Southern Africa. African Development Review, 29 (1), 92–102. https://doi.org/10.1111/1467-8268.12242

Martin, J. D., Abbas, D., & Martins, R. J. (2016). The validity of global press ratings. Journalism Practice, 10 (1), 93–108. https://doi.org/10.1080/17512786.2015.1010851

Mathur, A., & Singh, K. (2013). Foreign direct investment, corruption and democracy. Applied Economics, 45 (8), 991–1002. https://doi.org/10.1080/00036846.2011.613786

Menger, P.-M. (2010), Cultural policies in Europe from a state to a city-centered perspective on cultural generativity. GRIPS Discussion Paper No. 10–28 , GRIPS Policy Research Center,.1–9, Tokyo, Japan. Retrieved May 10 2022, from chromeextension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.grips.ac.jp/r-center/wpcontent/uploads/10-28.pdf

Muhammad, B., Khan, M. K., Khan, M. I., & Khan, S. (2022). Impact of foreign direct investment, natural resources, renewable energy consumption, and economic growth on environmental degradation: Evidence from BRICS, developing, developed and global countries. Environmental Science and Pollution Research, 28 , 21789–21798. https://doi.org/10.1007/s11356-021-16861-4

Nuță, A. C., & Nuță, F. M. (2020). Modelling the influences of economic, demographic, and institutional factors on fiscal pressure using OLS, PCSE, and FD-GMM approaches. Sustainability, 12 (4), 1681. https://doi.org/10.3390/su12041681

Ojekemi, O. S., Ağa, M., & Magazzino, C. (2023). Towards achieving sustainability in the BRICS economies: The role of renewable energy consumption and economic risk. Energies, 16 (14), 5287. https://doi.org/10.3390/en16145287

Olorogun, L. A. (2023). Modelling financial development in the private sector, FDI, and sustainable economic growth in sub-Saharan Africa: ARDL bound test-FMOLS, DOLS robust analysis. Journal of the Knowledge Economy . https://doi.org/10.1007/s13132-023-01224-w

Oneal, J. R. (1994). The affinity of foreign investors for authoritarian regimes. Political Research Quarterly, 47 (3), 565–588. https://doi.org/10.1177/106591299404700302

Osiewicz, P., & Skrzypek, M. (2020). Is Spain becoming a militant democracy? Empirical evidence from freedom house reports. Aportes-Revista de Historia Contemporanea, 35 (103), 7–33. Retrieved April 10 2022, from https://www.revistaaportes.com/index.php/aportes/article/view/526/296 . Accessed 28 Jan 2024.

Pesaran, M. H. (2004). General diagnostic tests for cross-section dependence in panels. IZA Discussion Paper No. 1240 . Bonn, Germany. Retrieved June 10 2023, from chromeextension://efaidnbmnnnibpcajpcglclefindmkaj/https://docs.iza.org/dp1240.pdf . Accessed 10 Jun 2024.

Pesaran, M. H. (2006). Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica, 74 (4), 967–1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x

Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A bias-adjusted LM test of error cross-section independence. The Econometrics Journal, 11 (1), 105–127. https://doi.org/10.1111/j.1368-423X.2007.00227.x

Pesaran, M. H., & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142 (1), 50–93. https://doi.org/10.1016/j.jeconom.2007.05.010

Phillips, P. C. B., & Sul, D. (2003). Dynamic panel estimation and homogeneity testing under cross-section dependence. The Econometrics Journal, 6 (1), 217–259. https://doi.org/10.1111/1368-423X.00108

Putra, R. F., & Putri, D. Z. (2021). The effect of corruption, democracy and foreign debt on economic growth in Asian Pacific countries. Jambura Equilibrium Journal, 3 (2), 66–71. https://doi.org/10.37479/jej.v3i2.10272

Raghutla, C., & Chittedi, K. R. (2021). Financial development, energy consumption, technology, urbanization, economic output and carbon emissions nexus in BRICS countries: An empirical analysis. Management of Environmental Quality, 32 (2), 290–307. https://doi.org/10.1108/MEQ-02-2020-0035

Rahalkar, H., Sheppard, A., Lopez Morales, C. A., Lobo, L., & Salek, S. (2021). Challenges faced by the biopharmaceutical industry in the development and marketing authorization of biosimilar medicines in BRICS TM countries: An exploratory study. Pharmaceutical Medicine, 35 , 235–251. https://doi.org/10.1007/s40290-021-00395-8

Ranjan, V., & Agraval, G. (2011). FDI inflow determinants in BRIC countries: A panel data analysis. International Business Research, 4 (4), 255–263. https://doi.org/10.5539/ibr.v4n4p255

Ratiu, D. E. (2013). Creative cities and/or sustainable cities: Discourses and practices. City, Culture and Society, 4 , 125–135. https://doi.org/10.1016/j.ccs.2013.04.002

Rodrik, D. (1996). Labor standards in international trade: Do they matter and what do we do about them? In R. Lawrence, D. Rodrik, & J. Whalley (Eds.), Emerging Agenda for Global Trade: High States for Developing Countries (pp. 35–79). Johns Hopkins University Press.

Shahbaz, M., Nuta, A. C., Mishra, P., & Ayad, H. (2023). The impact of informality and institutional quality on environmental footprint: The case of emerging economies in a comparative approach. Journal of Environmental Management, 348 , 119325. https://doi.org/10.1016/j.jenvman.2023.119325

Spar, D. (1999). Foreign investment and human rights. Challenge, 42 (1), 55–80. https://doi.org/10.1080/05775132.1999.11472078

Steiner, N. D. (2016). Comparing freedom house democracy scores to alternative indices and testing for political bias: Are US allies rated as more democratic by freedom house? Journal of Comparative Policy Analysis: Research and Practice, 18 (4), 329–349. https://doi.org/10.1080/13876988.2013.877676

Suny, R. G. (2017). The crisis of bourgeois democracy: The fate of an experiment in the age of nationalism, populism, and neo-liberalism. New Perspectives on Turkey, 57 , 115–141. https://doi.org/10.1017/npt.2017.32

Swamy, P. (1970). Efficient inference in a random coefficient regression model. Econometrica, 38 (2), 311–323. https://doi.org/10.2307/1913012

Tavares, J., & Wacziarg, R. (2001). How democracy affects growth. European Economic Review, 45 (2001), 1341–1373. https://doi.org/10.1016/S0014-2921(00)00093-3

Toguç, N., Kuşkaya, S., Magazzino, C., & Bilgili, F. (2023). The impact of natural disaster shocks on business confidence level and Istanbul stock exchange: A wavelet coherence approach. Geological Journal, 58 (12), 4610–4624. https://doi.org/10.1002/gj.4868

Vijayakumar, N., Sridharan, P., & Rao, K. C. S. (2010). Determinants of FDI in BRICS countries: A panel analysis. International Journal of Business Science & Applied Management (IJBSAM), 5 (3), 1–13.

Voicu, M., & Peral, E. B. (2014). Support for democracy and early socialization in a non-democratic country: Does the regime matter? Democratization, 21 (3), 554–573. https://doi.org/10.1080/13510347.2012.751974

Westerlund, J., & Edgerton, D. L. (2008). A simple test for cointegration in dependent panels with structural breaks. Oxford Bulletin of Economics and Statistics, 70 , 665–704. https://doi.org/10.1111/j.1468-0084.2008.00513.x

World Bank. (2020). World Development Indicators , Retrieved April 25 2020, from https://databank.worldbank.org/indicator/NE.EXP.GNFS.ZS/1ff4a498/Popular-Indicators# . Accessed 11 Nov 2023.

Xu, J., Wang, J., Yang, X., Jin, Z., & Liu, Y. (2024). Digital economy and sustainable development: Insight from synergistic pollution control and carbon reduction. Journal of the Knowledge Economy . https://doi.org/10.1007/s13132-024-01950-9

Yang, M., Magazzino, C., Abraham, A. A., & Abdulloev, N. (2024). Determinants of load capacity factor in BRICS countries: A panel data analysis. Natural Resources Forum, 48 (2), 525–548. https://doi.org/10.1111/1477-8947.12331

Yusuf, H. A., Shittu, W. O., Akanbi, S. B., Umar, H. M. B., & Abdulrahman, I. A. (2020). The role of foreign direct investment, financial development, democracy, and political (in) stability on economic growth in West Africa. International Trade, Politics and Development, 4 (1), 27–46. https://doi.org/10.1108/ITPD-01-2020-0002

Zellner, A. (1962). An efficient method of estimating seemingly unrelated regressions and tests for aggregation bias. Journal of the American Statistical Association, 57 (298), 348–368. https://doi.org/10.1080/01621459.1962.10480664

Download references

Acknowledgements

We appreciate all the efforts and time spent by the editorial office members and anonymous reviewers for all their comments, which contribute to the quality of the article.

Open access funding provided by the Scientific and Technological Research Council of Türkiye (TÜBİTAK). No funds were received from any institution.

Author information

Authors and affiliations.

Department of Economics, Hasan Kalyoncu University, Şahinbey, Gaziantep, Turkey

Ibrahim Cutcu

Department of Political Science and International Relations, Hasan Kalyoncu University, Şahinbey, Gaziantep, Turkey

Ahmet Keser

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Ahmet Keser .

Ethics declarations

Ethics approval.

The research was conducted within all ethical standards.

Conflict of Interest

The authors declare no competing interests.

Permission to reproduce material from other sources

Not Applicable.

Additional information

Publisher's note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Practice Points/Highlights

1. From 1994 to 2018, there was significant cointegration between democracy and foreign direct investment (FDI) in BRICS-TM countries among the emerging markets.

2. Democratic developments and FDI move together in the long run and have a balanced relationship between them in Emerging Market Economies.

3. Policymakers in BRICS-TM countries need to develop democracy awareness and ensure democratic developments to attract foreign direct investment to secure a resilient economy in these emerging economies

4. Governments and decision-makers in emerging economies, such as BRICS-TM, who want to attract FDI need to consider the structural breaks and the relationship between democracy and FDI .

Supplementary Information

Supplementary material 1., rights and permissions.

Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ .

Reprints and permissions

About this article

Cutcu, I., Keser, A. Democracy and Foreign Direct Investment in BRICS-TM Countries for Sustainable Development. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-02205-3

Download citation

Received : 11 October 2023

Accepted : 14 June 2024

Published : 05 September 2024

DOI : https://doi.org/10.1007/s13132-024-02205-3

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Economic development
• BRICS-TM countries
• Structural breaks panel cointegration

JEL Classification

• Find a journal
• Publish with us
• Track your research

The Assessment

AP Research

Guidance for artificial intelligence tools and other services, assessment overview.

In AP Research, students are assessed on the academic paper and presentation and oral defense of research. The academic paper is 4,000–5,000 words, and the presentation and defense take approximately 15–20 minutes.

Encourage your students to visit the  AP Research student page  for assessment information and practice.

Participate in the AP Capstone Diploma Program

To offer AP Research, schools must sign up to participate in AP Capstone , and teachers need to attend mandatory summer training. Visit the AP Capstone Diploma program page for more information.

Assessment Dates

Wed, Apr 30, 2025

11:59 PM ET

Deadline for Students to Submit AP Research Performance Tasks

Assessment format.

The AP Research assessment has consistent weighting and scoring guidelines every year, so you and your students know what to expect.

Guidance for Hosting Student Presentations

See the rules and guidelines  for hosting your students’ presentations whether your school is teaching remotely, in person, or in a hybrid setting.

Samples and Scoring Guidelines

Ap research past exam questions.

View sample responses and scoring guidelines for the through-course performance tasks from past years.

Score Reporting

Ap score reports for educators.

Access your score reports.