The relationship between foreign direct investment and foreign trade: The case of Turkey

In this work, specific to Turkey in 1980-2020, relationship between Foreign Direct Investment and import-export versions was analyzed. With the scope of analysis, to determine versions' stability, we benefited from extended Dickey-Fuller (ADF) and Phillips Perron (PP) sequential unit root tests. In this work, to find out causality between versions, Toda-Yamamato Causality Test was used. According to Toda-Yamamato Causality analysis results, between Foreign Direct Investment and real export, we found out dual causality relationship at %10 significance level; between Foreign Direct Investment and real import versions, we found out dual causality relationship at %5 significance level; we found out one-way causality relationship from real export to real import at %5 significance level. Any developments in Foreign Direct Investments can be explained with real export; any developments in real export can be explained with Foreign Direct Investments too. Also any developments in Foreign Direct Investments can be explained with real import; developments in real import can be explained with Foreign Direct Investments. Lastly, emerging developments in real export can be explained real import.