THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN TURKEY: AN ANALYSIS WITH STRUCTURAL BREAKS
TÜRKİYE’DE DOĞRUDAN YABANCI SERMAYE YATIRIMLARI VE EKONOMİK BÜYÜME İLİŞKİSİ: YAPISAL KIRILMALI BİR ANALİZ

Author : Hüseyin USLU
Number of pages : 507-529

Abstract

In this study, effects of foreign direct investment (FDI) on economic growth in Turkey is investigated by time series analysis with structural break method for 1980-2017 period. Trade openness is used as a control variable and the structural break dates are included in the analyzes with dummy variables. The series were found to move together in the long-run by Johansen cointegration test. In the long-run analysis carried out by VEC method; it is seen that the effect of FDI on GDP is not statistically significant while the effect of foreign trade volume (FTV) on GDP is positive and statistically significant. According to the results; as foreign trade volume of Turkey increases by 1%, GDP increases by an average of 0.813%, in the 1980-2017 period. In short-run analysis; it is significantly determined that FDI affects GDP positively, but the short-run effects of FTV on GDP are found to be statistically insignificant. In the causality test conducted by VECM method; causality relationships between FDI, FTV and GDP are valid in the long-run, whereas this relationship is partially valid in the short-run.

Keywords

Foreign Direct Investment, Economic Growth, Commercial Outward Openness, Structural Breakdown Analys

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