THE ROLE OF CAPITAL MOVEMENTS AND CAPITAL MARKETS ON ECONOMIC GROWTH: A PANEL DATA ANALYSIS FOR DEVELOPING COUNTRIES

Abstract

Purpose - The effects of foreign capital inflows and credit expansion on economic growth of developing countries are controversial because it is claimed that they cause business cycle and financial crises. In order to look for answers to the discussion, the impacts of foreign capital flows and credit size on economic growth are questioned in this paper. Methodology - The data of selected developing economies over the period between 2005 and 2015 are investigated by panel data analysis. Findings - According to the results of analysis, while foreign direct investment is statistically significant and has a positive impact on economic growth, there isn’t a significant relation between portfolio investment and economic growth. Domestic credit provided by financial sector, current account deficit and inflation have not significant impact on economic growth. On the other hand, foreign exchange rate and unemployment are negatively associated with economic growth. Conclusion - This study finds that foreign direct investment increases economic growth in developing countries, but portfolio investment does not have any impact on economic growth. In addition, increase in domestic credit size is not associated with economic growth in developing countries.

Keywords

• developing countries,economic growth,foreign direct investment,portfolio investment

SERMAYE HAREKETLERİNİN VE SERMAYE PİYASALARININ EKONOMİK BÜYÜMEDEKİ ROLÜ: GELİŞMEKTE OLAN ÜLKELERİN BİR PANEL VERİ ANALİZİ

Abstract

Amaç – Gelişmekte olan ülkelere yönelik yabancı sermaye hareketleri ve kredi genişlemesinin ekonomik büyüme üzerindeki etkisi, -iş döngüsü ve finansal krizlere de neden olduğu iddiasıyla- tartışmalıdır. Bu çalışmada, söz konusu tartışmaya cevap aramak amacıyla sermaye hareketleri ve kredi büyüklüğünün ekonomik büyüme üzerindeki etkisi sorgulanmıştır. Yöntem – Gelişmekte olan seçilmiş ekonomilerin 2005 – 2015 yılları arasındaki verileri panel veri analizi yöntemi ile incelenmiştir. Bulgular- Analiz sonuçlarına göre, doğrudan yabancı sermaye yatırımlarının ekonomik büyüme üzerinde istatistiksel olarak anlamlı ve pozitif etkisi bulunurken, portföy yatırımları ile ekonomik büyüme arasında istatistiksel olarak anlamlı ilişki bulunamamıştır. Finansal sektör tarafından sağlanan krediler, cari açık ve enflasyonun ekonomik büyüme ile ilişkisinin olmadığı görülürken, döviz kuru ve işsizliğin ekonomik büyüme ile negatif ilişkili olduğu sonucuna ulaşılmıştır. Sonuç- Gelişmekte olan ülkelere doğrudan yabancı yatırımlar olarak gelen sermaye hareketlerinin ekonomik büyümeye katkı sağladığı, ancak portföy yatırımlarının gelişmekte olan ekonomilerin büyümesine olumlu ya da olumsuz etkisinin olmadığı sonucu elde edilmiştir. Ayrıca yurtiçi kredilerdeki artışın da ekonomik büyümeye etkisinin olmadığı görülmüştür.

Keywords

• gelişmekte olan ülkeler,ekonomik büyüme,doğrudan yabancı sermaye yatırımları,portföy yatırımları

References

1. Aizenman, J., Jinjarak, Y., & Park, D. (2013). Capital flows and economic growth in the era of financial integration and crisis, 1990–2010. Open Economies Review, 24(3), 371-396.
2. Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2004). FDI and economic growth: the role of local financial markets. Journal of International Economics, 64(1), 89–112.
3. Bordo, M. D., Meissner, C.M. & Stuckler,D. (2010). Foreign currency debt, financial crises and economic growth: A long-run view, Journal of International Money and Finance, 29: 642-665.
4. Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? 1. Journal of International Economics, 45(1), 115-135.
5. Bussiere, M. & Marcel Fratzscher. (2008). Financial Openness and Growth: Shortrun Gain, Long-run Pain, Review of International Economics, 16, 1: 69-95.
6. Carkovic, M. ve Levine, R. (2002). Does Foreign Direct Investment Accelerate Economic Growth?. Working Paper, University of Minnesota Department of Finance. Available at SRN: https://ssrn.com/abstract=314924 or http://dx.doi.org/10.2139/ssrn.314924
7. Chanda, A. (2005). The influence of capital controls on long run growth: Where and how much? Journal of Development Economics, 77: 441-466.
8. Choong, C.K., Ahmad, Z., Zulkornain, Y. & Habibullah, M.S. (2010). Private capital flows, stock market and economic growth in developed and developing countries: A comparative analysis, Japan and the World Economy 22: 107-117.

9. De Mello, L. R. (1999). Foreign direct investment-led growth: evidence from time series and panel data. Oxford economic papers, 51(1), 133-151.
10. Durham, K. B. (2004). Absorptive capacity and the effect of foreign direct ınvestment and equity foreign portfolio ınvestment on economic growth. European Economic Rewiev,48:285-306.
11. Ferreira, M. A. & Laux, P.A. (2009). Portfolio flows, volatility and growth. Journal of International Money and Finance, 28, 271-292.
12. Klein, M. W., & Olivei, G. P. (2008). Capital account liberalization, financial depth, and economic growth. Journal of international money and finance, 27(6), 861-875.
13. Kose, M.A., Prasad, E.S. & Terrones, M.E. (2009). Does openness to international financial flows raise productivity growth? Journal of International Money and Finance, 28, 554-580.
14. Lee, C. C., & Chang, C. P. (2009). FDI, financial development, and economic growth: international evidence. Journal of applied economics, 12(2), 249-271.
15. Makki, S. S., & Somwaru, A. (2004). Impact of foreign direct investment and trade on economic growth: Evidence from developing countries. American Journal of Agricultural Economics, 86(3), 795-801.
16. Nair‐Reichert, U., & Weinhold, D. (2001). Causality tests for cross‐country panels: a New look at FDI and economic growth in developing countries. Oxford bulletin of economics and statistics, 63(2), 153-171.
17. Reinhart, C. & Reinhart, V. (2009). Capital Flow Bonanzas: An Encompassing View of the Past and Present. NBER Macroeconomics Annual, University of Chicago Press.