Year 2016, Volume 4, Issue 4, Pages 20 - 38 2017-05-14

FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?
FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?

Yusuf Bayraktutan [1] , Meltem Tarı Özgür [2]

295 303

The interaction between foreign direct investments (FDI) and economic growth is one of the frequently discussed issues in the literature, both theoretically and empirically. The role of different channels through which FDI promotes economic growth is an aspect that should be focused on. The main purpose of this study is to assess the impact of the technology spillovers as a driving force for economic growth of Turkey in terms of manufacturing industry using the data of 1988-2012 period. For this aim, the dynamic interactions between export of the manufacturing industry (EXP) as a measure of technology spillover, gross domestic product (GDP), gross fixed capital formation (GFCF) and FDI in manufacturing industry were investigated via cointegration and causality tests in addition to the innovation accounting techniques in the vector autoregressive (VAR) framework. While the cointegration test yields no clear evidence of long-run equilibrium relationship among these variables. Granger causality test indicates that there is a univariate causality running from the EXP to the all other variables, and FDI is not Granger cause for the other variables. Nevertheless, the positive impact of FDI on the GDP and EXP variables is observed within the results of the innovation accounting analysis. From this point of view, it is concluded that the FDI leads economic growth more significantly in indirect ways rather than through direct ways. Under the light of these empirical outcomes, proposing policies based on strategies which encourage FDI inflows to the sub-sectors of manufacturing industry with higher technological gaps seem as effective and valuable in terms of promoting economic growth.


The interaction between foreign direct investments (FDI) and economic growth is one of the frequently discussed issues in the literature, both theoretically and empirically. The role of different channels through which FDI promotes economic growth is an aspect that should be focused on. The main purpose of this study is to assess the impact of the technology spillovers as a driving force for economic growth of Turkey in terms of manufacturing industry using the data of 1988-2012 period. For this aim, the dynamic interactions between export of the manufacturing industry (EXP) as a measure of technology spillover, gross domestic product (GDP), gross fixed capital formation (GFCF) and FDI in manufacturing industry were investigated via cointegration and causality tests in addition to the innovation accounting techniques in the vector autoregressive (VAR) framework. While the cointegration test yields no clear evidence of long-run equilibrium relationship among these variables. Granger causality test indicates that there is a univariate causality running from the EXP to the all other variables, and FDI is not Granger cause for the other variables. Nevertheless, the positive impact of FDI on the GDP and EXP variables is observed within the results of the innovation accounting analysis. From this point of view, it is concluded that the FDI leads economic growth more significantly in indirect ways rather than through direct ways. Under the light of these empirical outcomes, proposing policies based on strategies which encourage FDI inflows to the sub-sectors of manufacturing industry with higher technological gaps seem as effective and valuable in terms of promoting economic growth.


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Subjects Social
Journal Section ARTICLES
Authors

Author: Yusuf Bayraktutan
Institution: KOCAELI UNIV
Country: Turkey


Author: Meltem Tarı Özgür

Bibtex @research article { iremjournal271040, journal = {International Review of Economics and Management}, issn = {2148-3493}, address = {Gökhan ÖZER}, year = {2017}, volume = {4}, pages = {20 - 38}, doi = {10.18825/iremjournal.271040}, title = {FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?}, key = {cite}, author = {Bayraktutan, Yusuf and Tarı Özgür, Meltem} }
APA Bayraktutan, Y , Tarı Özgür, M . (2017). FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?. International Review of Economics and Management, 4 (4), 20-38. DOI: 10.18825/iremjournal.271040
MLA Bayraktutan, Y , Tarı Özgür, M . "FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?". International Review of Economics and Management 4 (2017): 20-38 <http://dergipark.org.tr/iremjournal/issue/28054/271040>
Chicago Bayraktutan, Y , Tarı Özgür, M . "FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?". International Review of Economics and Management 4 (2017): 20-38
RIS TY - JOUR T1 - FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY? AU - Yusuf Bayraktutan , Meltem Tarı Özgür Y1 - 2017 PY - 2017 N1 - doi: 10.18825/iremjournal.271040 DO - 10.18825/iremjournal.271040 T2 - International Review of Economics and Management JF - Journal JO - JOR SP - 20 EP - 38 VL - 4 IS - 4 SN - 2148-3493- M3 - doi: 10.18825/iremjournal.271040 UR - https://doi.org/10.18825/iremjournal.271040 Y2 - 2017 ER -
EndNote %0 International Review of Economics and Management FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY? %A Yusuf Bayraktutan , Meltem Tarı Özgür %T FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY? %D 2017 %J International Review of Economics and Management %P 2148-3493- %V 4 %N 4 %R doi: 10.18825/iremjournal.271040 %U 10.18825/iremjournal.271040
ISNAD Bayraktutan, Yusuf , Tarı Özgür, Meltem . "FOREIGN DIRECT INVESTMENTS AND ECONOMİC GROWTH: HOW WELL DOES THE TECHNOLOGY CHANNEL WORK IN TURKEY?". International Review of Economics and Management 4 / 4 (May 2017): 20-38. https://doi.org/10.18825/iremjournal.271040