In this increasingly globalized era, foreign direct investments are considered to be one of the most important sources of external financing for all countries. This paper investigates the causal relationship between trade openness and foreign direct investment (FDI) inflows in Romania during the period 1997–2019. Throughout this study, Trade Openness is the main independent variable, and Gross Domestic Product (GDP), Real Effective Exchange Rate (EXR), Inflation (INF), and Education (EDU) act as control variables for investigating the relationships between trade openness (TOP) and FDI inflow in Romania. The Auto Regressive Distributed Lag (ARDL) Bounds test procedure was adopted to achieve the above-mentioned objective. Trade openness has negative and statistically significant long-run and short-run relationships with FDI inflows in Romania throughout the period. Trade openness negatively affects the FDI inflow, which suggest that the higher the level of openness is, the less likely it is that FDI will be attracted in the long run. The result of the Granger causality test indicated that Romania has a unidirectional relationship between trade openness and FDI. It also showed that the direction of causality ran from FDI to trade openness.

The study examines the causal links between trade openness and FDI inflows in Sri Lanka from 1997 to 2019 using the ARDL test and Granger causality test. The results of the ARDL bound test indicate that an increase in trade openness does not affect FDI in the long run. However, short-run results indicated that an increase in trade openness attracts more FDI. The Granger causality test shows that Sri Lanka has a unidirectional causal relationship that runs from trade openness to FDI. The study suggests that the government should focus on long-term FDI target trade policies in order to improve the investment climate in Sri Lanka.

FDI and trade openness are considered development tools in all sectors, and the tourism sector is no exception. We examine the impact of inward FDI and trade openness on tourism in selected Asian emerging markets using panel data from the Autoregressive Distributed Lag of the Pooled Mean Group model and examine the direction of the causality of inward foreign direct investment and trade openness on tourism using the Granger causality test for the period 1996-2019. In our research model, we employed the number of tourists’ arrivals as the dependent variable and inward foreign direct investment and trade openness as the main independent variables. The control variables are as follows: GDP growth rate, inflation, mobile telephone subscriptions, and the global financial crisis of 2008. According to the pooled mean group ARDL estimation results, inward FDI, trade openness, GDP growth rate, inflation, and mobile telephone subscription variables had long-run significance in explaining tourism, whereas the global financial crisis dummy variable did not explain tourism arrivals. In the short run, an increase in the GDP growth coefficient attracted more international tourists to Asian EMEs, whereas an increase in inflation reduced tourism arrivals. The study found that there is a unidirectional relationship between FDI inflows and tourism arrivals, with the causality flowing from tourism to FDI. Furthermore, the results of the causality test implied that there were bidirectional connections between tourism and trade openness in Asian emerging markets. The study suggests that emerging economies should also promote short-term policies to increase international tourism by increasing trade openness and foreign direct investment.

In many countries, foreign direct investment is becoming one of the most significant components of economic development. The Asian emerging market is regarded as one of the best places to invest. Many governments have taken steps to deal with international trade to attract more foreign direct investment and open up their economies by implementing several progressive policies and creating a free trade zone. The main objective is to examine the impact of trade openness on foreign direct investment inflows in Asian emerging economies by employing the Panel-Pooled Mean Group Autoregressive Distributed Lag (PMGARDL) model and examining the direction of the causality between trade openness and FDI inflows using the Granger causality test period from 1996 to 2019. To examine the impact of trade openness on FDI inflows, we employed potential determinants of FDI such as GDP, population size, inflation, mobile telephone subscriptions, gross fixed capital formation, and total reserve as control variables in the model. As a result, trade openness has a positive and statistically significant impact on FDI inflows in the long run, but there is no significant relationship between trade openness and FDI inflows in the short run. The Granger causality test indicated that Asian emerging countries have a unidirectional causal relationship and that the causality runs from trade openness to foreign direct investment. In line with the findings, it is better to promote strong open trade policies to improve the investment climate in each country to attract more FDI into the region.