ANALYSIS OF RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH: THE CASE OF TURKEY

Abstract

Direct foreign investment has played critical role emerging economies. These investments of contributes significant to the process of capital formation by supporting the host conutry’s resources. The aim of this study is to analyze the relationship of foreign direct investment and economic growth in Turkey. VAR analysis method has been used for this purpose. The study focused on the period 1980-2013. In this study, ıt was used foreing direct investment as the dependent variable; inflation rate, gross domestic product, the share in gross domestic product of loans granted to the private sector and secondary education enrollment rate as independent variable. As a result of ıt was observed relationship between foreign direct investment, inflation and loans granted to the private sector in short-term. In the long term there is a causal relationship between foreing direct investment, gross domestic product, loans granted to the private sector and secondary education enrollment rate