The analysis of the effects of inward foreign direct investment on Turkey?s export performance

Turkey has been following an export-oriented growth strategy since 1980. Important changes have occurred between the process of liberalization adopted after this date and direct foreign investments as well. Direct foreign investments make important contributions to the modernization of the production structure and make it gain dynamism for developing economies that they lean toward through not only additional capital and related employment opportunities that they bring but also through new technologies that they provide. Therefore, the relationship between direct foreign investment and export performance examined in this thesis will make an important contribution to the literature in Turkey.In this thesis, the relationship between inward foreign direct investment to Turkey and Turkey?s export performance is analyzed. In this context, direct foreign investment is explained both conceptually and theoretically and the dynamic relationship the inward direct investment to Turkey and Turkey?s export performance is examined in terms of the effects of direct foreign investment flow on Turkey?s export performance.Since the purpose of the thesis is to examine the relationship between direct foreign investment and export performance, the effects of direct foreign investment on exports in Turkey are analyzed with eight variable- VAR (vector autoregressive) model. In this context, the trend and seasonality, stationarity, unit root (ADF and Phillips-Perron) analyses with regard to the VAR model toward the variables are performed. Additionally, the Granger Causality Analysis is used to determine the direction of the causality between variables which are used in the estimation of the VAR model. Later, the VAR model in the appropriate lag length is estimated and the Impulse-Response Analysis obtained from the VAR Model and the results of the Variance Decomposition are interpreted for each variable. A positive relationship between foreign direct investment inflows in to Turkey and Turkey?s export performance was observed.