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Dynamic relationship among foreign direct investments, human capital, economic freedom and economic growth: Evidence from panel cointegration and panel causality analysis

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  • Oktay KIZILKAYA

    (Ahi Evran University, Turkey)

  • Ahmet AY

    (Selçuk University, Turkey)

  • Gökhan AKAR

    (Selçuk University, Turkey)

Abstract

This study investigates the dynamic relationship between foreign direct investment (FDI), human capital, economic freedom and economic growth for the period of 2000-2013 covering 39 countries. In this context, we utilized panel cointegration, panel fully modified ordinary least squares (FMOLS), panel dynamic panel ordinary least squares (FMOLS), and panel vector error correction model (VECM) based Granger causality analysis methods. In this study: i) variables are cointegrated in the long term; ii) according to FMOLS results, FDI, human capital and economic freedom have a positive impact on economic growth; iii) according to panel DOLS results, human capital and economic freedom have a positive impact on economic growth, and finally; iv) panel VEC results supports the relationship between variables both short and long term. In the last chapter, we evaluated the findings obtained from the analysis and suggested some policy recommendations.

Suggested Citation

  • Oktay KIZILKAYA & Ahmet AY & Gökhan AKAR, 2016. "Dynamic relationship among foreign direct investments, human capital, economic freedom and economic growth: Evidence from panel cointegration and panel causality analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 127-140, Autumn.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:3(608):p:127-140
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    3. Hisham Mohamed Hassan & Sonal Devesh & Omer Ali Ibrahim, 2022. "The Importance of Trade Openness and Inflation for Attracting Foreign Direct Investment in GCC Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 17-40.

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