FDI and Economic Growth: The Role of Economic Freedom

In this study, we examine the effects of economic freedom and foreign direct investment (FDI) on economic growth. We utilized a panel of 83 developed and developing countries over the period 1970 to 2009. We observed that, including the interaction term of economic freedom and FDI makes the estimation results more powerful. In other words, our findings show that economic freedom does have a power to affect economic performance through FDI.