EFFECT OF FOREIGN DIRECT INVESTMENTS ON ECONOMIC GROWTH: AN EMPIRICAL ANALYSIS

Abstract

In this study effects of foreign direct investments (FDI) on economic growth were analysed by bounds testing approach (ARDL) developed by Pesaran et al. (2001) in the sample of Turkey by using the data of 1991:Q4-2013:Q1 periods. The series of goods and services exports which was thought to effect the growth were also included in the analysis. At the analysis result it was found that series were cointegrated. According to the empirical findings, the effect of foreign direct investments and exports on economic growth were observed as statistically significant and positive in accordance with our theoretical expectations. However, the effect of foreign direct investments is considerably at low level. In short term analysis coefficient of error correction term was found statistically significant and negative. Therefore, deviations occurred among variables converge to equilibrium level

Keywords

• Foreign Direct Investment, Economic Growth, Export.

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