The Effects of Foreign Direct Investment and Economic Freedom on Economic Growth in Developing Countries

One of the economic factors of economic development is achieving positive and stable economic growth and Foreign Direct Investment (FDI) is one of the factors affecting the stable economic growth. FDI attraction can make the growth and development progress faster in the host countries by positive effects such as gaining wealth, technology transfer, extending the market size and export advantages, introducing new processes, improving management ability, training human resources and accessing foreign markets. Considering the important role of FDI, this study is trying to study the effects of FDI and economic freedom on economic growth in 10 selected developing countries in period of 2000 to 2013 using panel data. The results show that FDI has a positive and meaningful effect on the economic growth of the studied countries so that we can say by increasing FDI there will be an improvement in the economic growth of the countries. Also the index of economic freedom has a positive and meaningful effect on economic growth. It is to be mentioned that the rate of economic openness and the index of producer price also have had positive effect on the economic growth of the studied countries.