The impact of foreign direct investment on economic growth and employment in Turkey

Foreign direct investments, which have gained strength with globalization, have contributed to host countries in many ways. Foreign direct investment has a significant impact on developing countries, especially those experiencing a saving-investment deficit problem. In addition to being a source of capital for countries, these investments effect macroeconomic variables in the long term. In this study, in Turkey the impact of foreign direct investment for economic growth and employment were examined. For this purpose, ARDL analysis and TodaYamamoto causality test were applied by using data for the period of 2006: Q1-2018: Q4. As a result of the empirical analyzes for foreign direct investments and economic growth, it was concluded that foreign direct investment had a positive effect on economic growth in the long run. In addition there is a bi-directional causality relationship between variables. In the analyzes conducted for foreign direct investments and employment, it was determined that foreign direct investment on employment had a positive effect in the long run and had no causal relationship between variables. When the findings of the econometric analysis are evaluated in general, it can be said that foreign direct investment in Turkey's economy, increase economic growth and employment but are insufficient. In order to maintain this contribution, it is considered that it would be beneficial to attract foreign direct investments to the manufacturing sector which can be created. In addition, in order to increase employment, it is considered that investments should be made in the form of new investments.