The impacts of foreign direct investments on economic growth in Turkey: 1980-2015

Foreign direct investments (FDI) in Turkey have expanded rapidly following the liberalization programme initiated in the early 1980s. Turkey has accomplished a record level in terms of its performance to attract FDI in post-2000 era. The study aims to explore the impacts of the FDI on economic growth during the years 1980 to 2015 using time series analysis. The annual data of the gross domestic product (GDP), FDI inflows, direct investments, and foreign trade announced by TURKSTAT, CBRT and Ministry of Development were employed in the study. According to the results of the analysis, the Augmented Dickey Fuller unit root test results suggest that the variables are non-stationary at levels, but become stationary in the first differences. Through the Johansen Co-integration test, it has been found that there is long-run relationship between GDP and other variables, and the effect is statistically significant. Finding of Granger causality states that there is a bidirectional causality between FDI and GDP. The results of this study imply that a positive change in the level of FDI is likely to increase the production of goods and services in Turkey.