The present work explores the Granger causality between GDP (Growth domestic product), exports and Foreign Direct Investment in Ecuador and Colombia for the period of 1980 – 2014. The Analysis for the Ecuador shown no significant causality between the three variables; GDP, FDI, EX. The examination conclusion for Colombia exposes that there are significant relationships between the GDP and FDI, the rest of economic variables for Colombia didn’t show causality relationship among them. The empirical results indicate that Ecuador and Colombia should have different policies since they are in different economic situations. Colombia was analyzed for the period of 1980 – 2014. Therefore, unidirectional causality running from FDI to GDP was found in Colombia. Moreover, unidirectional causality running from FDI to GDP agrees with the Free Trade Agreement hypothesis in order to increase exports and FDI, consequently will affect GDP. Furthermore the Analysis for Ecuador suggests a policy for the government to apply the strategy of exports, looking to avoid a negative effect on Foreign Direct Investments and Gross Domestic Product.
