| Geopolitical developments have significant effects on the economic and financial indicators of the countries due to the fact that the economies of the countries are open to external shocks. Rising geopolitical risks increase political and economic uncertainties and cause significant fluctuations in financial investments and capital movements. In this context, in this study, the effect of geopolitical risk on foreign direct investments and financial development was investigated. The 1985-2020 annual data of Canada, France, Germany, Italy, Japan, Russia, the United States, and the United Kingdom (G8 countries) were analyzed with the Kónya (2006) panel causality test. As a result of the analysis, it was found that there is a causality from geopolitical risk to foreign direct investments and financial development. In the case of countries, geopolitical risks in Canada, France, Germany, Russia and the United Kingdom are the Granger cause of foreign direct investment; geopolitical risks in Japan, Russia, the United States and the United Kingdom were determined to be the Granger cause of financial development. |
