Abstract:

The change in the global economy since 1980 has increased the degree of integration between countries by reducing the limits existing between countries. Since the 1980s, economic relations in the form of development between developed and developing countries have then been transferred to capital flows where economic criteria such as direct foreign investments (DYY) exist. In particular, developing countries need to invest intensely in ensuring economic development and stability and eliminating developmental differences. There are numerous theoretical and empirical studies in literature that show that the performance of DYY in a country is influenced. Recently, a possible relationship between economic freedom and DYY has been emphasized. In this regard, the objective is to determine the causal relationship between foreign direct investments and economic freedoms for the 1997-2016 period of the OECD countries. According to the analysis, there is no causal relationship from DYY to economic freedom, but there is a causal relationship from economic freedom to DYY.