During the recent decades, Foreign Direct Investment (FDI) as a growth-enhancing component has received great attention in developing countries generally and in less developed countries particularly. It has been a matter of great concern for many economists that how FDI affects economic growth of host countries. In a closed economy, with no access to foreign savings, investment is financed solely from domestic savings. However, in an open economy investment is financed both by domestic savings and foreign capital inflows, including FDI. FDI enables investment-receiving countries to achieve investment levels beyond their capacity to save.