Causality analysis between foreign direct investment inflows between countries: FRragile five example

Today, with the increase of globalization movements around the world, foreign direct investments, which have developed in terms of volume and the region they reach, are seen as a very important opportunity for underdeveloped and developing countries to close the capital gap they need. Countries that want to get more shares from the international investments are trying to improve their macroeconomic indicators and in addition to this, they apply various incentives and discounts to investors. 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, the causality among foreign direct investment inflows of BIITS countries was determined by the Extended Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests, followed by the Toda-Yamamoto causality test (for the period 1971-2019. annual data). As a result of the findings; Various causality relationships have been determined between the foreign direct investment inflow data of BIITS countries and the aforementioned countries. These; According to the test results applied for the model in which the direct foreign investment input data of Brazil is the dependent variable; At the 1% significance level, a causality relationship is determined from foreign direct investment inflows from India, Turkey and South Africa to Brazilian FDI inflows, while at a significance level of 5%, it is revealed that there is a causality relation between Indonesian FDI and Brazilian FDI inflows. According to the test result applied for the model in which the direct foreign investment input data of India is the dependent variable; At the 1% significance level, causality was determined from the FDI inflows of Brazil and South African countries to the FDI inflows from India, while the causality from Turkey FDI to India FDI inflows was determined at the 10% significance level. No causality could be determined in terms of foreign direct investment inflow from Indonesia to India. According to the test results applied for the model in which the foreign direct investment input data belonging to Indonesia is the dependent variable; While the causality from the Brazilian FDI to Indonesian FDI inflow was determined at a significance level of 1%, no causality in terms of FDI inflows from India, Turkey and South Africa to Indonesia. According to the test result applied for the model in which the foreign direct investment inflow data of Turkey is the dependent variable; While the causality from the foreign direct investment inflow to Turkey from the foreign direct investment inflow to Turkey was determined at the 1% significance level, the causality from the foreign direct investment inflow from Brazil to the foreign direct investment inflow to Turkey at the 10% significance level was determined. No causality has been determined in terms of foreign direct investment inflows from Indonesia and South Africa to Turkey. According to the test results applied for the model in which the direct foreign investment input data of South Africa is the dependent variable; At the 1% significance level, causality was determined from foreign direct investment inflows to Brazil, India, Indonesia and Turkey to South Africa. In addition, within the scope of this research; It was concluded that foreign direct investment data belonging to countries can also be qualified as an independent variable and included in the analysis. Key Words: Foreign Direct Investment, Fragile Five Countries, Extended Dickey-Fuller Unit Root Test, Phillips-Perron Unit Root Test, Toda-Yamamoto Causality Analysis