Relationship between foreign direct investment and economic growth: For Turkey (1980-2020)

This study, aims to identify the relationship between the foreign direct investments and economic growth. The effect of foreign direct investments on economic growth was analyzed using the annual data of the 1980-2020 period, by means of the Fourier ADL Cointegration test, the Fully Modified Ordinary Least Squares (FMOLS) method, Dynamic Ordinary Least Squares (DOLS), Canonical Cointegration Regression Estimation (CCR). At the same time, the relationships of casuality among the foreign direct investments, economic growth and export variables were examined with the Granger Casuality, Toda and Yamamoto Casuality, Enders Jones, Nazlıoğlu, Pata and Yılancı Casuality tests. The findings which are gathered from the Fourier ADL Cointegration test shows that variables are cointegrated. According to the various EKK estimates (FMOLS, DOLS, CCR), it has been determined that the change in FDI affects the economic growth. It is found one-sided causality that is from the economic growth to foreign direct investments and exportation regarding to the causality test findings of Granger, Toda and Yamamoto, Enders and Jones, Nazlıoğlu, Pata and Yılancı. The findings, are crucial owing to revealing the relationship between the economic growth and foreign direct investments. As a result, when all these tests are evaluated together; It has been detected that the increase in FDI in the Turkish economy also increases economic growth and there is one-sided casuality economic growth to foreign direct investments.