In this study we investigate the relationship between foreign direct investment and economic growth for nine developing countries using the annual data from 1970 to 2006. In the analysis we used causality test developed by Toda-Yamamoto (1995). We observe one directional causality, for six countries from economic growth to foreign direct investment, and for one country from foreign direct investment to economic growth. Bi-directional causality is observed only for two countries. These findings, in general, can be considered as the indicator of movement of the foreign direct investment in the developing countries depending upon the economic growth.
Key words: Foreign Direct Investments, Developing Countries, Toda-Yamamoto (1995) Causality Test Article Language: EnglishTurkish
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