Macroeconomic Variables and Foreign Direct Investment Inflows in Turkey

Saliha Meftah, Abdelkader Nassour

Abstract


Foreign direct investment (FDI) is an essential factor in the development of a country. This study aims to examine what factors influence foreign direct investment. By using the vector error correction model, the research shows that there is a long-term causality relationship between exchange rates and inflation with FDI. However, in the short term, there are no variables that affect FDI. Besides, the Granger causality test shows causality in the direction of GDP and FDI, while other variables do not have causality. This research has implications for policymakers to pay attention to macroeconomic variables in increasing the flow of foreign direct investment.


Keywords


foreign direct investment; macroeconomic variables; vector error correction model

Full Text:

PDF

References


Alshamsi, K. H., bin Hussin, M. R., & Azam, M. (2015). The Impact of Inflation and GDP per Capita on Foreign Direct Investment: The Case of United Arab Emirates. Investment management and Financial Innovations, 12(3), 132-141.

Alvarago, R., Iñiguez, M., & Ponce, P. (2017). Foreign Direct Investment and Economic Growth in Latin America. Economic Analysis and Policy, 56, 176-187. https://doi.org/ 10.1016/j.eap.2017.09.006.

Amoah, E., Nyarko, E., & Asare, K. (2015). FDI, Inflation, Exchange Rate and Growth in Ghana: Evidence from Causality and Co-integrated Analysis. European Scientific Journal, 11(31), 294-304.

Bağci, E., & Ergüven, E. (2016). Relations Between Interest Rate, Inflation, Growth, and Investment in Turkey, 2002-2015. ISOR Journal of Economics and Finance, 7(5), 43-49.

Bibi, S., Ahmad, S. T., & Rashid, H. (2014). Impact of Trade Openness, FDI, Exchange Rate, and Inflation on Economic Growth: A Case Study of Pakistan. International Journal of Accounting and Financial Reporting, 4(2), 236-257.

Cambazoğlu, B., & Sevcan, G. (2016). The Relationship between Foreign Exchange Rate and Foreign Direct Investment in Turkey. Economics, Management, and Financial Markets, 11(1), 284–293.

Carbonell, J. B., & Werner, R. A. (2018). Does Foreign Direct Investment Generate Economic Growth? A New Empirical Approach Applied to Spain. Economic Geography, 94(4), 425-456. https://doi.org/10.1080/00130095.2017.1393312.

Dorantes, A., & Pozo, S. (2001). Foreign Exchange Rate and Foreign Direct Investments in the United States. The International Trade Journal, 15(3), 323-343. https://doi.org/10.1080/088539001753228018.

Dunning, J. H. (1988). The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies, 19(1), 1-31. https://doi.org/10.1057/palgrave.jibs.8490372.

Feeny, S., Lamsiraroj, S., & McGillivray, M. (2014). Growth and Foreign Direct Investment in the Pacific Island Countries. Economic Modelling, 37, 332-339. https://doi.org/10. 1016/j.econmod.2013.11.018.

Ghazali. A. (2010). Analyzing the relationship between Foreign Direct Investment, Domestic Investment and Economic Growth for Pakistan. International Research Journal of Finance and Economics, 47, 124-131. https://doi.org/10.13140/2.1.1730.0484

Kiyota, K., & Urata, S. (2004). Exchange Rate, Exchange Rate Volatility and Foreign Direct Investment. The World Economy, 27(10), 1501-1536. https://doi.org/10.1111/ j.1467-9701.2004.00664.x.

Kueh, J., & Yong, S. W. (2018). FDI Led Growth in Malaysia: Autoregressive Distributed Lag (ARDL) Bounds Testing Approach. International Business Research, 11(11),46-54.

Lamsiraroj, S., & Ulubasoglu, M. A. (2015). Foreign Direct Investment and Economic Growth: A Real Relationship or Wishful Thinking. Economic Modelling, 51, 200-213. https://doi.org/10.1016/j.econmod.2015.08.009.

Lamsiraroj, S. (2016). The Foreign Direct Investment-Economic Growth Nexus. International Review of Economics and Finance, 42, 116-133. https://doi.org/10.1016/j.iref .2015.10.044.

Li, X., & Liu, X. (2005). Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship. World Development, 33(3), 393-407. https://doi.org/10.1016/j.worlddev.2004.11.001.

Li, C., & Tanna, S. (2019). The Impact of Foreign Direct Investment on Productivity: New Evidence for Developing Countries. Economic Modelling, 80, 453-466. https://doi.org/ 10.1016/j.econmod.2018.11.028.

Magnier-Watanabe, R., & Lemaire, J-P. (2018). Inbound Foreign Direct Investment in Japan: A Typology. Intenational Business Review, 27(2), 431-442. https://doi.org/ 10.1016/j.ibusrev.2017.09.010.

Makiela, K., & Ouattara, B. (2018). Foreign Direct Investment and Economic Growth: Exploring the Transmission Channels. Economic Modelling, 72, 296-305. https://doi.org/10.1016/j.econmod.2018.02.007.

Mason, R. L., & Vracheva, V. (2017). The Impact of Inflation Targeting on Attracting Foreign Direct Investment. Journal of Applied Business and Economics, 19(4), 79-94.

Nishiyama, H. (2017). The Effect of Exchange Rate Fluctuations on Intra-Industry Reallocation in a Firm Heterogeneity Model with Trade and Foreign Direct Investment. The Quarterly Review of Economics and Finance, 64, 32-43. https://doi.org/10.1016/j.qref.2016.09.003.

Omankhanlen, A. E. (2011). The Effect of Exchange Rate and Inflation on Foreign Direct Investment and its relationship with Economic Growth in Nigeria. Economics and Applied Information, 1, 5-16.

Sayek, S. (2009). Foreign Direct Investment and Inflation. Southern Economic Journal, 76(2), 419-443. https://doi.org/10.4284/sej.2009.76.2.419.

Sharifi-Renani, H., & Mirfatah, M. (2012). The Impact of Exchange Rate Volatility on Foreign Direct Investment in Iran. Procedia Economics and Finance, 1, 363-373. https://doi.org/10.1016/S2212-5671(12)00042-1.

Simionescu. M. (2016). The Relation Between Economic Growth and Foreign Direct Investment During the Economic Crisis in the European Union. Journal of Economics and Business, 34(1), 187-213.

Susic, I., Trianovic, M. S., & Susic, M. (2017). Foreign Direct Investment and Their Impact on the Economic Development of Bosnia and Herzegovina. IOP Conference Series: Materials Science and Engineering, 200. https://doi.org/10.1088/1757-899X/200/1/012019.

Takagi, S., & Shi, Z. (2011). Exchange Rate Movements and Foreign Direct Investment (FDI): Japanese Investment in Asia, 1987-2008. Japan and the World Economy, 23(4), 265-272. https://doi.org/10.1016/j.japwor.2011.08.001.

Wattanakul, T. (2018). Analysis of Relationship Between GDP and FDI on the Economic Growth of Laos. Economics World, 6(4), 295-302.

Wint, A., & Williams, D. (2002). Attracting FDI to Developing Countries. International Journal of Public Sector Management, 15(5), 361-374. https://doi.org/10.1108/09513550 210435719

Weisskof, T. E. (1972). The Impact of Foreign Capital Inflow on Domestic Savings in Underdeveloped Countries. Journal of International Economics, 2(1), 25-38. https://doi.org/10.1016/0022-1996(72)90043-8.




DOI: https://doi.org/10.15408/sjie.v8i2.10560 Abstract - 0 PDF - 0

Refbacks

  • There are currently no refbacks.




View My Stats