Relationship Between Foreign Direct Investment and Export: An Empirical Study for Turkey

Abstract

In parallel with the developments in the world after 1980, Turkey based its development policy on exports. Increasing exports depends on increasing investment capacity on the one hand and expanding the market on the other. Foreign direct investments come first among the resources that Turkey, which has insufficient capital accumulation, will use to overcome this deficiency. It is necessary to increase the use of this resource in order to expand the production capacity and thus the export volume. In this study, the relationship between foreign direct investments and exports in Turkey between 1970-2019 is discussed. The relationship between the two variables was investigated by the Fourier SHIN cointegration test and a long-term relationship was found between the foreign direct investments and export. According to the results obtained from the DOLS estimation model, it was determined that a 1% increase in foreign direct investments increased exports by about 0.67%.