External debt effect on developing countries economic growth-for example Turkey (1990-2016)

Developing countries need various resources in order to achieve their economic growth targets faster. One way they meet this resource need is external debts. External debts will have a positive impact on growth when used in order to increase efficient investments and capital. The growth of a country will enable the country to reach the desired level of development with the increasing level of prosperity in that country. This approach made from starting work on the external debt of Turkey's economy, the impact on economic growth were examined. In the light of the statistical data in the 1990Q1-2016Q4 period, an econometric analysis based on time series was conducted. In this study, the stationery was measured by ADF test. The interaction and causality of variables are explained by VAR analysis and Granger causality test. Finally, with Engle-Granger cointegration test, long-term relationships of variables and short-term relations with Error Correction Model were examined. According to the findings, there is a positive relationship between two variables and a bidirectional causality relationship. There is a long-term cointegration relationship between the two variables and a short-term relationship. Based on these findings, it was concluded that foreign borrowing positively affected economic growth. Key Words: External Debt, Growth, VAR Analysis, Granger Causality Test