Uncovering the channels through which FDI affects current account: the case of Turkey
AbstractIn this paper, we argue that foreign direct investment (FDI) flows can have an effect on current account through three different channels: exports, imports, and profit remittances. By identifying the response differentials of these variables to a change in FDI flows employing a Vector Autoregression (VAR) model, we provide evidence for the current-account disturbing effects of FDI. Our findings suggest that profit remittances complicate the relationship between FDI and current account, and therefore should be taken into consideration in formulating policies concerning FDI flows.
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Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Economic Policy in Emerging Economies.
Volume (Year): 5 (2012)
Issue (Month): 2 ()
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Web page: http://www.inderscience.com/browse/index.php?journalID=219
foreign direct investment; FDI flows; current account; exports; imports; profit remittances; Turkey.;
Other versions of this item:
- A. Yasemin Yalta, 2011. "Uncovering the Channels through which FDI affects current account: The Case of Turkey," Working Papers 1108, TOBB University of Economics and Technology, Department of Economics.
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