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 InfoPaper provided by TOBB University of Economics and Technology, Department of Economics in its series Working Papers with number 1108.
Date of creation: Oct 2011
Date of revision:
Other versions of this item:
- A. Yasemin Yalta, 2012. "Uncovering the channels through which FDI affects current account: the case of Turkey," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 5(2), pages 158-167.
- NEP-ALL-2011-11-01 (All new papers)
- NEP-ARA-2011-11-01 (MENA - Middle East & North Africa)
- NEP-CWA-2011-11-01 (Central & Western Asia)
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