The effect of direct investments on income inequality: Empirique analysis on Turkey

Foreign direct investments and income inequality are two important economic factors that have significant implications for achieving countries' economic growth and development goals, as well as overcoming economic and social problems. These factors have gained particular importance for country economies in the context of increased global economic integration and neoliberal policies implemented by world economies since the 1980s, and have become the subject of research interest. Developing countries like Turkey hold a significant place in these studies. The aim of this study is to reveal the effects of foreign direct investments on income inequality in the Turkish economy. In this context, Vector Autoregression (VAR) method was analyzed between 1984 and 2021, and it was concluded that there is a negative relationship between foreign direct investments and income inequality in the Turkish economy. The findings indicate that decreases in foreign direct investments lead to improvements in the Gini coefficient. The results can be attributed to economic policies implemented between 1984 and 2021 and the areas where foreign direct investments are used. Therefore, in the context of the findings, policies should be developed to use foreign direct investments to improve income inequality in the Turkish economy.