The relati̇onshi̇p between external debt and economi̇c growth i̇n Turkey: A study on the 1980-2010 peri̇od

The achievement of targeted economic growth of undeveloped and developing countries is a crucial situation. However, lack of national saving which is required economic growth forces these countries to get external finance. One of these financial resources is external dept. External dept is an additional resources in addition to country own resources. These provided resources will increased capital deposit, the investments, the economic growth and the country welfare will increase. Based on tih criterion, the relationship between external debt and economic growth in Turkish economy between 1980 and 2010 has been examined using econometric methods. The stableness of variables in the application has been measured with ADF test. To analyze the long term and short term relationship between the variables at the same level stabilizes Engle-Granger co-integration test and error correction model have been used respectively. The obtained findings showed that there is a mutual two ways causative relationship between variables. Also, in this study, since there is a positive relationship between two variables, it has been inferred that external debt increases the economic growth. Key Words: External Debt, Economic Growth, ADF Unit Root Test, Co-integration,Error Correction Model.