The effect of foreign direct investment on competitiveness in turkey: An empirical analysis

The purpose of this thesis is to examine the effect of foreign direct investments on competitiveness using time series analysis. The study covers quarterly data from manufactoring sector of Turkey for the period 2005-2019. The competitiveness as the dependent variable is calculated according to the revealed comparative advantages. In addition, the model includes foreign direct investments, real effective exchange rate, productivity and economic growth series as explanatory variables. For this purpose, the autoregressive distributed lag (ARDL) model based on the least squares method is applied due to the variables with mixed integration order between level and first differences. The main result of the study shows that there is not significantly effect of foreign direct investment on competitiveness both short and long term. This finding may indicate that foreign direct investments in the manufacturing industry in Turkey are investments in the form of mergers and acquisitions directed to the domestic market.