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Foreign Aid and Economic Growth: A Panel Cointegration for Selected Turkic Republics

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  • Hasret Balcioglu

    (Department of Business Administration, Cyprus International University, North Cyprus, Mersin 10 Turkey,)

Abstract

This paper considers the relationship between external aid and economic growth in Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan from 1992 to 2014. These countries have benefited positively from continuous aid inflows from Turkey. In this study, the model is a panel system with the variables real GNP per capita for country and Turkish aid. From the analysis, it could be understood that all the panel unit root tests show that each variable is integrated of the first order I (1) and there is strong evidence for panel cointegration between real GNP per capita and foreign aid for the selected countries. The country-specific elasticity of real income with respect to foreign aid for most of the countries is close to one. Therefore, it can be recommended that foreign capital flows can have more positive effect on real income with the supplements of domestic savings and complements of domestic resources. Thus, it is advisable for the countries to develop their capacities to optimize the benefits from international resources with supportive integration in international markets.

Suggested Citation

  • Hasret Balcioglu, 2016. "Foreign Aid and Economic Growth: A Panel Cointegration for Selected Turkic Republics," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(6), pages 17-23, June.
    • Handle: RePEc:mir:mirbus:v:6:y:2016:i:6:p:17-23
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    More about this item

    Keywords

    Economic Growth; Foreign Capital Flows; Panel System; Turkey; Turkic Republics.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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