Does Foreign Direct Investment Affect Macroeconomic Dynamics? An S-VAR Approach for Turkey

Emel Siklar and İlyas Şıklar
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Emel Siklar: Anadolu University, FEAS, Department of Numerical Methods, Yunus Emre Campus, 26470 Eskisehir, Turkey

International Journal of Economics and Financial Research, 2022, vol. 8, issue 3, 85-103

Abstract: This study analyzes the effects of foreign direct investments (FDI) on the macroeconomic dynamics of the Turkish economy through the Structural Vector Autoregressive (SVAR) model. The results obtained, by the economic theory, reveal the positive effects of FDI on economic growth and domestic investment volume. The results also confirm the assumption of economic theory that domestic and foreign investments are complementary. It is understood that the FDI put some pressure on prices to increase, but it is balanced by the decisions of the monetary authority. While FDI does not play a critical role in reducing unemployment, it significantly contributes to the increase in imports, especially in capital goods.

Keywords: FDI; Macroeconomic variables; Economic policy; SVAR model. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2022:p:85-103

DOI: 10.32861/ijefr.83.85.103

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