The Relationship Between Foreign Direct Investment Inflows and Domestic Investment in Turkey: Nonlinear ARDL Approach

Year 2021, , 271 - 292, 30.07.2021

Zühal Kurul

https://doi.org/10.17233/sosyoekonomi.2021.03.14

Cited By: 4

Abstract

Foreign direct investment (FDI) inflows have rapidly increased the international economic activities in developing countries since the mid-1980s. Also, FDI inflows have been considered as an important external source of productivity increase, technology transfer, and capital accumulation in these countries. Thus, it becomes important to investigate the impact of FDI inflows on domestic investment. This study analyses the relationship between FDI inflows and domestic investment in Turkey throughout 1984-2018 by employing a nonlinear ARDL approach. This study reveals an asymmetric complementary relationship between FDI inflows and domestic investment in the long run. We find that the long-run impact of a positive change (increase) in FDI inflows on domestic investment is more significant than that of a negative change (decrease). This study suggests that policymakers should formulate policies that attract more FDI inflows and improve the investment climate to increase domestic investment.

Keywords

Foreign Direct Investment Inflows, Domestic Investment, Asymmetry, Nonlinear ARDL Approach

Türkiye’de Doğrudan Yabancı Yatırım Girişleri ve Yurtiçi Yatırım İlişkisi: Doğrusal Olmayan ARDL Yaklaşımı

Abstract

Doğrudan yabancı yatırım girişleri, 1980’lerin ortalarından bu yana gelişmekte olan ülkelerde uluslararası ekonomik aktiviteleri hızla artırmaktadır. Ayrıca, doğrudan yabancı yatırım girişleri bu ülkelerde teknoloji transferinin ve sermaye birikiminin bir dış kaynağı olarak görülmektedir. Dolayısıyla doğrudan yabancı yatırım girişlerinin yurtiçi yatırımlar üzerindeki etkilerinin incelenmesi önem kazanmaktadır. Bu çalışma, doğrudan yabancı yatırım girişleri ile yurtiçi yatırımlar arasındaki ilişkiyi Türkiye için 1984-2018 dönemini kapsayan veriler kullanarak doğrusal olmayan ARDL yaklaşımı ile analiz etmektedir. Çalışmanın sonuçları, doğrudan yabancı yatırım girişleri ile yurtiçi yatırımlar arasında uzun dönemde asimetrik bir tamamlayıcılık ilişkisi olduğunu göstermektedir. Çalışmada doğrudan yabancı yatırım girişlerindeki pozitif bir değişimin (artışın) yurtiçi yatırımlar üzerindeki uzun dönem etkisinin, negatif bir değişimin (azalışın) etkisinden daha büyük olduğu bulunmuştur. Bu sonuçlar, yurtiçi yatırımların artırılması için politika yapıcıların yatırım ortamını iyileştiren ve doğrudan yabancı yatırımları daha çok çekmeyi sağlayan politikalar geliştirmesi gerektiğini ortaya koymaktadır.

Keywords

Doğrudan Yabancı Yatırım Girişleri, Yurtiçi Yatırımlar, Asimetri, Doğrusal Olmayan ARDL Yaklaşımı

References

• Adams, S. (2009), “Foreign Direct Investment, Domestic Investment, and Economic Growth in Sub-Saharan Africa”, Journal of Policy Modeling, 31(6), 939-949.
• Agosin, M.R, & R. Machado (2005), “Foreign Investment in Developing Countries: Does It Crowd in Domestic Investment?, Oxford Development Studies, 33(2), 149-162.
• Agrawal, P. (2000), “Economic Impact of Foreign Direct Investment in South Asia”, India and the WTO, 117.
• Alfaro, L. & A. Chanda & S. Kalemli-Ozcan & S. Sayek (2004), “FDI And Economic Growth: The Role of Local Financial Markets”, Journal of International Economics, 64(1), 89-112.
• Al-Sadiq, M.A.J. (2013), Outward Foreign Direct Investment and Domestic Investment: The Case of Developing Countries, (No. 13-52), International Monetary Fund.
• Amighini, A.A. & M.S. Mcmillan & M. Sanfilippo, (2017), FDI and Capital Formation in Developing Economies: New Evidence From Industry-Level Data, (No. W23049), National Bureau of Economic Research.
• Amsden, A.H. (2011), “Firm Ownership and Entrepreneurship”, içinde: A. Szirmai & W. Naudè & M. Goedhuys (eds.), Entepreneurship, Innovation, and Economic Development, Oxford University Press, 65-77.
• Apergis, N. & C.P. Katrakilidis & N.M. Tabakis (2006), “Dynamic Linkages Between FDI Inflows and Domestic Investment: A Panel Cointegration Approach”, Atlantic Economic Journal, 34(4), 385-394.
• Balasubramanyam, V.N. & M. Salisu & D. Sapsford (1996), “Foreign Direct Investment and Growth in EP and IS Countries”, The Economic Journal, 106(434), 92-105.
• Banerjee, A. & J. Dolado & R. Mestre (1998), “Error‐correction Mechanism Tests for Cointegration in a Single‐equation Framework”, Journal of Time Series Analysis, 19(3), 267-283.
• Bayar, Y. (2014), “Effects of Foreign Direct Investment Inflows and Domestic Investment on Economic Growth: Evidence From Turkey”, International Journal of Economics and Finance, 6(4), 69-78.
• Bhattacharyya, S. & S. Dowrick & J. Golley, (2009), “Institutions and Trade: Competitors or Complements in Economic Development?”, Economic Record, 85(270), 318-330.
• Bilgili, F. & N.S.H. Tülüce & İ. Doğan (2012), “The Determinants of FDI in Turkey: A Markov Regime-switching pproach”, Economic Modelling, 29(4), 1161-1169.
• Bleaney, M.F. (1996), “Macroeconomic Stability, Investment and Growth in Developing countries”, Journal of Development Economics, 48(2), 461-477.
• Borensztein, E. & J. De Gregorio & J.W. Lee (1998), “How Does Foreign Direct Investment Affect Economic Growth?”, Journal of International Economics, 45(1), 115-135.
• Bosworth, B.P. & S.M. Collins & C.M. Reinhart (1999), “Capital Flows to Developing Economies: Implications for Saving and Investment”, Brookings Papers on Economic Activity, 1999(1), 143-180.
• Broock, W.A. & J.A. Scheinkman & W.D. Dechert & B. LeBaron (1996), “A test for Independence Based on The Correlation Dimension”, Econometric Reviews, 15(3), 197-235.
• Chang, R. & L. Kaltani & N.V. Loayza (2009), “Openness Can Be Good for Growth: The Role of Policy Complementarities”, Journal of Development Economics, 90(1), 33-49.
• Chang, S.C. (2010), “Estimating Relationships Among FDI Inflow, Domestic Capital, and Economic Growth Using The Threshold Error Correction Approach”, Emerging Markets Finance and Trade, 46(1), 6-15.
• Choi, C. (2004), “Foreign Direct Investment and Income Convergence”, Applied Economics, 36(10), 1045-1049.
• De Mello, L.R. (1999), “Foreign Direct Investment-Led Growth: Evidence From Time Series and Panel Data”, Oxford Economic Papers, 51(1), 133-151.
• Enders, W. & C.W.J. Granger (1998), “Unit-root Tests and Asymmetric Adjustment With An Example Using The Term Structure of Interest Rates”, Journal of Business & Economic Statistics, 16(3), 304-311.
• Erdal, F. & E. Tatoglu (2002), “Locational Determinants of Foreign Direct Investment In An Emerging Market Economy: Evidence From Tukey”, Multinational Business Review, 10, 21-27.
• Eroglu, O. & J. Hudson (1997), “The Effects of Foreign Capital Inflows in Turkey”, Hacettepe University Journal of Economics and Administrative Sciences, 15(1).
• Farla, K. & D. De Crombrugghe & B. Verspagen (2016), “Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?”, World Development, 88, 1-9.
• Fry, M.J. (1993), Foreign Direct Investment in a Macroeconomic Framework: Finance, Efficiency, Incentives and Distortions, (Vol. 1141). World Bank Publications.
• Güven, S. (2001), “Sermaye Hareketlerinin Nedenleri, Etkileri ve Türkiye Örneği”, İktisat İşletme ve Finans, 16(185), 79-98.
• Harrison, A. (1995), Openness and Growth: A Time-series, Cross-country Analysis for Developing Countries (No. w5221), National Bureau of Economic Research.
• Hu, J. & Z. Chen (2016), “A Unit Root Test Against Globally Stationary ESTAR Models When Local Condition Is Non-Stationary”, Economics Letters, 146, 89-94.
• İnsel, A. & N. Sungur (2003), “Effect of Capital Flows on Basic Macroeconomic Indicators: Evidence from Turkey, 1989 III-1999”, Türkiye Ekonomi Kurumu Tartışma Metni, 2003/8.
• Jansen, K. (1995), “The Macroeconomic Effects of Direct Foreign Investment: The Case of Thailand”, World Development, 23(2), 193-210.
• Jareño, F. & M. de la O González & M. Tolentino & K. Sierra (2020), “Bitcoin and Gold Price Returns: A Quantile Regression and NARDL Analysis”, Resources Policy, 67, 101666.
• Jyun-Yi, W. & H. Chih-Chiang (2008), “Does Foreign Direct Investment Promote Economic Growth? Evidence From a Threshold Regression Analysis”, Economics Bulletin, 15(12), 1-10.
• Kapetanios, G. & Y. Shin & A. Snell (2003), “Testing For a Unit Root in the Nonlinear STAR Framework”, Journal of Econometrics, 112(2), 359-379.
• Kara, M.A. & M. Kar (2005), “Yabancı Sermaye Çeşitlerinin Yatırımlar ve Tasarruflar Üzerine Etkilerinin Ekonometrik Analizi”, İktisat İşletme ve Finans, 20(228), 93-108.
• Karagöz, K. (2007), “Türkiye’de Doğrudan Yabancı Yatırım Girişlerini Belirleyen Faktörler: 1970-2005”, Journal of Yaşar University, 2(8), 929-948.
• Kim, D.D.K. & J.S. Seo (2003), “Does FDI Inflow Crowd Out Domestic Investment in Korea?”, Journal of Economic Studies, 30(6), 605-622.
• Kim, D.H. & S.C. Lin (2009), “Trade and Growth at Different Stages of Economic Development”, Journal of Development Studies, 45(8), 1211-1224.
• Kottaridi, C. & T. Stengos (2010), “Foreign Direct Investment, Human Capital And Non-Linearities in Economic Growth”, Journal of Macroeconomics, 32(3), 858-871.
• Leybourne, S. & P. Newbold & D. Vougas (1998), “Unit Roots and Smooth Transitions”, Journal of Time Series Analysis, 19(1), 83-97.
• Lipsey, R.E. (2004), “Home-And Host-Country Effects of Foreign Direct Investment”, içinde: R.E. Baldwin & L.A. Winters (eds.), Challenges to Globalization: Analyzing the Economics, University of Chicago Press, 333-382.
• Markusen, J.R. & A.J. Venables (1999), “Foreign Direct Investment as a Catalyst for Industrial Development”, European Economic Review, 43(2), 335-356.
• Mišun, J. & V. Tomšík (2002), “Foreign Direct Investment in Central Europe-Does It Crowd In Domestic Investment?”, Prague Economic Papers, 11(1), 57-66.
• Mody, A. & A. Murshid (2002), “Growing Up with Capital Flows”, IMF Working Paper WP/02/75, Washington, DE: IMF.
• Morrissey, O. & M. Udomkerdmongkol (2012), “Governance, Private Investment and Foreign Direct Investment in Developing Countries”, World Development, 40(3), 437-445.
• Ndikumana, L. & S. Verick (2008), “The Linkages Between FDI and Domestic Investment: Unravelling The Developmental Impact of Foreign Investment in Sub‐Saharan Africa”, Development Policy Review, 26(6), 713-726.
• Ndikumana, L. (2005), “Financial Development, Financial Structure, and Domestic Investment: International Evidence”, Journal of International Money and Finance, 24(4), 651-673.
• Omay, T. & B. Araz-Takay & A. Eruygur & İ. Kilic (2013), “The Effects of Terrorist Activities on Foreign Direct Investment: Nonlinear Evidence From Turkey”, Review of Economics, 64(2), 139-158.
• Omay, T. & D. Yildirim (2014), “Nonlinearity and Smooth Breaks in Unit Root Testing”, Econometrics Letters, 1(1), 2-9.
• Pesaran, M.H. & Y. Shin & R.J. Smith (2001), “Bounds Testing Approaches to the Analysis of Level Relationship”, Journal of Applied Econometrics, 16(3), 289-326.
• Ramirez, M.D. (2010), “Is Foreign Direct Investment Productive in the Latin America Case? A Panel Co-integration Analysis, 1980-2002”, The International Trade Journal, 25(1), 35-73.
• Sağlam, B.B. & A.Y. Yalta (2011), “Dynamic Linkages Among Foreign Direct Investment, Public Investment and Private Investment: Evidence from Turkey”, Applied Econometrics and International Development, 11(2), 71-82.
• Salahuddin, M. & M.R. Islam (2008), “Factors Affecting Investment in Developing Countries: A Panel Data Study”, The Journal of Developing Areas, 42(1), 21-37.
• Sayek, S. (2007), “FDI in Turkey: The Investment Climate and EU Effects”, The Journal of International Trade and Diplomacy, 1(2), 105-138.
• Shahzad, S.J.H. & S.M. Nor & R. Ferrer & S. Hammoudeh (2017), “Asymmetric determinants of CDS Spreads: US Industry-level Evidence Through the NARDL Approach”, Economic Modelling, 60, 211-230.
• Shin, Y. & B. Yu & M. Greenwood-Nimmo (2014), “Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework”, içinde: R.C. Sickles & W.C. Horrace (eds.) Festschrift in Honor of Peter Schmidt, New York, NY, Springer, 281-314.
• Sun, H. (1998), “Macroeconomic Impact of Direct Foreign Investment in China: 1979-96”, World Economy, 21(5), 675-694.
• Tang, S. & E.A. Selvanathan & S. Selvanathan (2008), “Foreign Direct Investment, Domestic Investment and Economic Growth in China: A Time Series Analysis”, World Economy, 31(10), 1292-1309.
• Titarenko, D. (2005), “The Influence of Foreign Direct Investment on Domestic Investment Processes in Latvia”, MPRA Paper, 18192, University Library of Munich, Germany.
• UNCTAD (2019), <https://unctad.org/en/publicationslibrary/wir2019_en.pdf>, 22.03.2020.
• Wacziarg, R. (2001), Measuring the Dynamic Gains from Trade, The World Bank.
• Wang, C. & L. Yu (2007), “Do Spillover Benefits Grow with Rising Foreign Direct Investment? An Empirical Examination of the Case of China”, Applied Economics, 39(3), 397-405.
• Wang, M. (2010), “Foreign Direct Investment and Domestic Investment in the Host Country: Evidence From Panel Study”, Applied Economics, 42(29), 3711-3721.
• World Bank (2009), “Global Development Finance 2009: Charting A Global Recovery: Review, Analysis, and Outlook (English)”, Global Development Finance, Washington, DC: World Bank.
• World Bank (2020), <https://data.worldbank.org>, 01.03.2020.