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The long run relationship between foreign direct investments, exports, and gross domestic product: panel data implications

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  • Mehmet ERYİĞİT

    (Abant Izzet Baysal University, Department of Business Administration, Golkoy Campus, Bolu, Turkey)

Abstract

Foreign direct investment (FDI) is defined as establishing a new company or branch of a foreign company by foreign investor or share acquisitions of a company established in host country (any percentage of shares acquired outside the stock exchange or 10 percent or more of the shares or voting power of a company acquired through the stock exchange (UNCTAD, 2012)). This study investigated the long-term relationship between FDI and export volume, FDI and Gross Domestic Products (GDP), and export volume and GDP through cointegration tests. It is conducted the panel data analysis using data for the period of 2000-2010 from 15 countries making direct investment in Turkey regularly since year 2000. Panel unit-root tests showed that variables are stationary for the first difference level. Residual based and error correction based cointegration tests revealed that there is long-term relationship between FDI and export volume, FDI and GDP, and export volume and GDP.

Suggested Citation

  • Mehmet ERYİĞİT, 2012. "The long run relationship between foreign direct investments, exports, and gross domestic product: panel data implications," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(10(575)), pages 71-84, October.
  • Handle: RePEc:agr:journl:v:10(575):y:2012:i:10(575):p:71-84
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    Keywords

    FDI; GDP; export volume; unit root; cointegration.;

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