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Growth Consequences Of Foreign Direct Investment: Some Results For Turkey

Author

Listed:
  • Ali F. Darrat

    (Department of Economics and Finance, Louisiana Tech University)

  • Jayanta Sarkar

    () (Department of Economics and Finance, Louisiana Tech University)

Abstract

Turkey has become the dominant recipient of FDI inflows in the Western Asian region. We explore if such inflows have promoted growth as expected. Our analysis of the FDI/growth nexus focuses both on the long-and short-run relations and allows for the possibility that growth also responds to other factors. The results support the theoretical priors and support the existence of a robust long-run relationship linking real economic growth with FDI inflows, economic openness and human capital. Among the three growth ingredients, only human capital accumulation (good education) appears capable of stimulating economic growth in the short-run as well. The results further imply that programs to attract larger FDI inflows to Turkey should persist for some time before they can produce noticeable economic benefits.

Suggested Citation

  • Ali F. Darrat & Jayanta Sarkar, 2009. "Growth Consequences Of Foreign Direct Investment: Some Results For Turkey," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(2), pages 85-96, December.
  • Handle: RePEc:jed:journl:v:34:y:2009:i:2:p:85-96
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    References listed on IDEAS

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    1. A. F. Darrat & D. A. Yousef, 2004. "Fertility, human capital, and macroeconomic performance: long-term interactions and short-run dynamics," Applied Financial Economics, Taylor & Francis Journals, vol. 14(8), pages 537-554.
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    3. Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-171, May.
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    6. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    7. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
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    Citations

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    Cited by:

    1. Hulya Ulku & Mehmet Pamukcu, 2015. "The impact of R&D and knowledge diffusion on the productivity of manufacturing firms in Turkey," Journal of Productivity Analysis, Springer, vol. 44(1), pages 79-95, August.
    2. Marc Lautier & Francois Moreaub, 2012. "Domestic Investment And Fdi In Developing Countries: The Missing Link," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(3), pages 1-23, September.
    3. Faik Bilgili & Nadide S. Tülüce & Ibrahim Doğan & H. Hilal Bağlıtas, 2016. "The causality between FDI and sector-specific production in Turkey: evidence from threshold cointegration with regime shifts," Applied Economics, Taylor & Francis Journals, vol. 48(5), pages 345-360, January.
    4. Genci Gjanҫi & Ardian Ҫërava, 2014. "The Role of FDI Inflow on the Post - Communist Albania’s Economic Growth," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 4(2), pages 1-6, April.

    More about this item

    Keywords

    FDI Inflows; Economic Growth; Human Capital; Turkey;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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