Effects of financial liberalization and foreign direct investments economic growth

In the globalizing world, it is entering the liberalization process to develop its financial markets. With this process, capital transfers are made between countries and the development of financial markets is ensured. Foreign direct investments are seen as the best way to transfer capital. The biggest aim of all liberalization and investment activities is to accelerate economic growth and development. In this study, the effects of financial liberalization and foreign direct investments on economic growth are analyzed with the quarterly data of Turkey for the period 1992-2020. Financial openness, foreign direct investments and gross domestic product are used. In econometric analysis, ADF, PP and KPSS unit root tests, then Granger causality and time-varying Granger causality tests are used. According to the results obtained from the analysis, there is bidirectional causality between variables. Both financial openness and foreign direct investment are the Granger drivers of economic growth as well as economic growth, financial openness and foreign direct investment.