Causality Analysis Between Foreign Direct Invesment Inflows Among Countries: Fragile Five Example

Abstract

Today, with the increase in globalization movements around the world, foreign direct investments, which have improved in terms of volume and the region they reach, are seen as a very important opportunity for especially underdeveloped and developing countries to close the capital deficit they need. In this study, the formation and determinants of foreign direct investments are discussed in detail. In this context, the Fragile Five countries Brazil, India, Indonesia, Turkey and South Africa were included in the study. Within the scope of the research, causality between foreign direct investment inflows of BIITS countries was determined by using Extended Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests with five different models in which each country is a dependent variable, followed by Toda-Yamamoto causality test (1971-2019 annual data) were analyzed. As a result of the findings obtained; It has been determined that there is a causal relationship between the foreign direct investment inflow data of BIITS countries and the mentioned countries.