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Determinants of private investments in Turkey: Examining the role of democracy

Selçuk Akçay and Karasoy Alper
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Karasoy Alper: Afyon Kocatepe University, Faculty of Economics and Administrative Sciences, Department of Economics, Afyonkarahisar, Turkey.

Review of Economic Perspectives, 2020, vol. 20, issue 1, 23-49

Abstract: This study investigates the determinants of private sector investments in Turkey with a focus on democracy. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach and two different democracy indices along with the other determinants of private investment, we estimated a private investment function for the 1975-2014 period. Our main finding is that democracy has a profound positive impact on private investment. Moreover, the results show that: (i) public investment is a substitute to private investment; (ii) macroeconomic instability dissuades private investment; (iii) real interest is a serious impediment to private investment; (iv) financial development and GDP growth rate stimulate private investment.

Keywords: ARDL; democracy; private investment; Turkey (search for similar items in EconPapers)
JEL-codes: C32 E22 (search for similar items in EconPapers)
Date: 2020
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