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This study investigates the causality relationships among the economic freedom, foreign direct investment (FDI), and economic growth for top FDI attracting countries during 1995–2019. Apart from the previous studies, we examine these three sets of causal links simultaneously and use the panel Granger causality test of Kόnya [2006. "Exports and Growth: Granger Causality Analysis on OECD Countries with a Panel Data Approach." Economic Modelling 23: 978–992], which considers heterogeneity and cross-sectional dependency across panel members. The findings provide weak evidence for the causal links between economic freedom, FDI, and economic growth for the overall score of economic freedom index. We also conduct causality tests for freedom vs. FDI, freedom vs. growth, and FDI vs. growth by using sub-components of the freedom index and reveal too many causality linkages among these variables. Thereby, we conclude that the direction of causality seems to be country and economic freedom indicator specific. These results have important implications for policymakers. [ABSTRACT FROM AUTHOR]

Previous contributions have recognized that Foreign Direct Investment (FDI) and financial development, respectively, play a vital role in enhancing economic growth across nations. However, the causal relationship between FDI and financial development have not been sufficiently investigated in developing countries and particularly in Africa. The current paper overcomes this gap by assessing the direct causality between FDI and financial development for 47 African countries. To that end, the frequency domain Granger causality test is used to establish short (temporary) and long run (permanent) causality. The main results document evidence of permanent and temporary causality in terms of bidirectional or unidirectional links, although there are several cases of no causality between FDI and financial development indicators. The outcomes of this study invite policymakers to address issues regarding the relationship between foreign investments and financial sector from a temporal or a permanent dynamic. [ABSTRACT FROM AUTHOR]