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The worldwide front witnesses a shift in geopolitics that shifts economic power from industrialized to developing economies. On a global scale, economic power is being consolidated within expanding economies. Developed economies are falling behind in economic growth and losing control of financial and political-institutional institutions. This shift in economic and political-institutional systems is the result of a decline in GDP, GDP per capita growth rate, FDI inflow, low population growth rate, a sharp decline in total trade growth rate in developed economies, and a rise in GDP, GDP per capita growth rate, FDI inflow, population growth rate, and complete trade expansion in developing economies.
The G7, as one of the leading groups of highly industrialized countries with a dominant position in the world economy's political and economic environment, has seen lower GDP and GDP per capita growth rates, a decrease in FDI inflow, slow growth in population increase, and a decrease in the growth rate of total trade of member economies. BRICS, a gathering of rapidly emerging countries, has seen an upward trend in Gross Domestic Product (GDP), growth rate in GDP per capita, inward flow of FDI, population growth rate, and total trade growth rate. (UNCTAD 2021) G7 recorded an average growth rate of 1.27% in GDP, while this rate was 5.62% in BRICS over the previous decade. (World Bank 2020) Average GDP growth per capita was 0.81% in G7, while 5.15% in BRICS during the last decade. G7 held an average of 29.27% of FDI share in total world's FDI while it was 17.80% in the case of BRICS economies, but the share of G7 in entire world FDI has decreased significantly over the previous decade.
The average population growth was 0.57% in G7 and 0.80% in the BRICS in the previous decade. G7 recorded an average compounded growth rate in total world trade of -1.11%, whiles the same rate was1.96% in BRICS. As an important economic variable, the inward flow of FDI has played a crucial role in industrialized nations' trade and industry expansion. (Goyal et al., 2020). A representative of developed economies, the G7 noticed a decline in FDI inflow in the previous decade, while the BRICS, as a representative of developing economies, noticed an increase in FDI inflow. This change in FDI inflow is due to the accelerating growth rate in the gross domestic product, foreign investment, high population growth rate, and increased shares in total world trade of the BRICS over the previous decade. In recent times, the big challenge to the G7 is to maintain their political and economic dominance and influence in the world economy, while the big challenge to BRICS is to replace the dominance of the G7 and emerge as a substitute for the G7.
Understanding the reasons driving these developing economies' fast rise is crucial for policymakers and regulators. As a result, the study utilized the ARIMA model to forecast the future trajectory of FDI inflow in the BRICS and G7 over the next ten years, from 2020 to 2030. Subsequently, research is also designed to compare the past trend in FDI inflow with the estimated future flow. This research has three crucial implications for the existing literature. First, this attempt would be helpful for foreign investors when deciding where to invest and for policymakers of these groups to frame more investment-friendly. Second, this will determine the best investment destination by comparing the past performance and the causes of better economic performance. Third, collating FDI inflow into the BRICS and the G7 will aid in determining the historical trend and forecasting future FDI inflow, providing an accurate picture and a foundation for prudent investment decisions.