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The Shaping of Foreign Direct Investments in Turkey by Macroeconomic and Geopolitical Parameters: Insights from the ARDL Perspective

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  • Atilla ÃœNLÃœ

Abstract

Foreign direct investments (FDI) have an important function in the process of supporting economic growth and development policies. With the acceleration of globalization since the 1990s, the volume of FDI in the world economy has started to increase, and this increase has been supported by factors such as economic integration, improvement of investment environments, and technological developments. However, there is no consensus on which factors are considered as anchors in the investment decisions of FDIs. The main reason for this uncertainty is that global conditions are constantly changing, and different factors come to the fore periodically. This study analyzes the effects of geopolitical risk and economic growth on foreign direct investment (FDI) in Turkey between 1985 and 2023. The stationarity properties of the series are determined by the ADF test, and then the short and long-run relationships between the variables are analyzed using the ARDL bounds test. The results show that geopolitical risk has a negative effect on FDI, while economic growth has a positive effect. These findings suggest that reducing geopolitical risks and ensuring sustainable economic growth play a decisive role in attracting FDI.

Suggested Citation

  • Atilla ÃœNLÃœ, 2025. "The Shaping of Foreign Direct Investments in Turkey by Macroeconomic and Geopolitical Parameters: Insights from the ARDL Perspective," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:250303
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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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