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Testing for Symmetric and Asymmetric Causality between FDI and Foreign Trade in Turkey

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  • UÄŸur Korkut Pata
  • Harun Terzi

Abstract

In this paper, the relationship between FDI and foreign trade is investigated by symmetric; Sims (1972), Dolado-Lütkepohl (1996), Hacker-Hatemi (2006) and asymmetric; Hatemi-J (2012) causality analysis after the liberalization period 1983-2014 for the Turkish economy. The results of the empirical analysis show that unidirectional positive and statistically significant causality is going from total (goods and services) and only goods export, import and foreign trade (total import and export) to FDI. The conclusion is that findings point out to the existence of complementary relationship between the variables. Consequently, these results support that the government should encourage foreign trade to increase FDI inflows in Turkey.

Suggested Citation

  • UÄŸur Korkut Pata & Harun Terzi, 2016. "Testing for Symmetric and Asymmetric Causality between FDI and Foreign Trade in Turkey," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 19(61), pages 47-70, September.
    • Handle: RePEc:rej:journl:v:19:y:2016:i:61:p:47-70
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; foreign trade; Symmetric and Asymmetric Causality Tests; Turkey.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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