A causal analysis of world and continent FDI inflows after 1980

This paper examines the causal relationship between different classifications of FDI inflows in the world. To find out about their relationships two methods namely OLS and Granger causality test have been used. In order to provide better results this study has tried to fulfill the classic assumptions such as heteroskedasticity, autocorrelation and other assumptions of OLS method. Moreover, Granger Causality test has been applied to find out direction of causality between two variables. Results of OLS method indicate the significance of developed and developing and also of all the regions in explaining world FDI inflows. The Granger causality test results for the different regions of the world clearly complement the Granger causality test results for world, developed and developing.