The relationship between selected macroeconomic indicators and foreign direct investments in Turkey and BRİCS economies

ABSTRACT PhD Thesis Suna ÇEVİK Manisa Celal Bayar University Graduate School of Education Department of Economics Supervisor: Prof. Dr. C. Erdem HEPAKTAN This dissertation examines the relationship between foreign direct investment (FDI) and macroeconomic variables in the context of developing economies in thes ample of Turkey and BRICS countries. FDI is considered as a strategic tool in developing countries in terms of economic growth, capital accumulation, technology transfer and foreign trade integration. The increase in the share of developing countries in the global distribution of FDI since the 1990s has brought the role of these investments in the development process to the forefront. The study aims to contribute to the literature in explaining the evolving position and importance of such investments in developing economies by determining in which direction and to what extent FDI in Turkey and BRICS economies, which are included in the developing countries group, affect various macroeconomic indicators by prioritizing the uncertainty index. In the study, quarterly data for the period from the first quarter of 2014 to the first quarter of 2024 are used. The analysis includes Turkey along with Brazil, Russia, India, China and South Africa; FDI is taken as the independent variable, while uncertainty index (WUI), inflation rate (CPI), balance of payments (BPM6) and real economic growth (RG) are taken as dependent variables. The data set is panel in nature and econometric analyses are first conducted using cross-sectional dependence and unitroot tests, followed by Westerlund panel cointegration test and Dumitrescu-Hurlin Granger causality test. According to the Westerlund cointegration results, there is a statistically significant long-run relationship between FDI and RG; especially the p-values of Gt and Pt test statistics are found at the 1% significance level. On the other hand, the Granger causality test showed that there is a significant causality from FDI only for BPM6 (p = 0.0178); this relationship was not observed for other variables. Incountry-by-country assessments, it is observed that in some countries, FDI prioritizes growth, while in others, growth and stability drive FDI. The findings reveal that FDI operates differently depending on country characteristics and that the level of uncertainty may have a limiting effect on investment decisions. Keywords: Foreign Direct Investment, Developing Countries, Uncertainty Index, Economic Growth, Balance of Payments, Inflation 2025, 327 pages