The relationship of foreign direct investments and economic growth in Türkiye: Toda-Yamamoto causality analyses

Globalization is a key concept in understanding today's world economy. Economic globalization can be defined as countries entering into more trade and investment relations with each other. Therefore, the globalization of production and Foreign Direct Investments constitute an important part of economic globalization. Especially in recent years, there has been a great academic and political interest in Foreign Direct Investments. The studies dealing with Foreign Direct Investments focus on the causes and effects of these investments. An important part of the studies deal with the relations between Foreign Direct Investments and the economic growth of the host country. This study deals with the relations between Foreign Direct Investments and economic growth in the Turkish economy which has participated in the globalization processes with the 24 January 1980 Decisions. Quarterly data for the period 2005-2021 were used in the study. The data obtained from the Central Bank of the Republic of Turkey and the relations between the variables were analyzed with symmetric and asymmetric causality tests. According to the findings obtained from the symmetric causality test conducted in the study, there is a one direction causality from FDI to economic growth in the Turkish economy On the other hand, according to the results of the asymmetric causality test, there is a two direction causality between the negative shocks in Foreign Direct Investments and the negative growth shocks in the Turkish economy. This result shows that a decrease in Foreign Direct Investments will negatively affect the growth of the Turkish economy.