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An Analysis of the Relationship between Foreign Direct Investment and Sustainable Development

Author

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  • Canan Şentürk
  • Şerife Kuyun

Abstract

The development and welfare efforts of countries are transformed over time and creates sustainable development with an approach that considers environmental factors. If the processing of raw materials is based solely on economic benefits, it will hinder environmental and social development in the long run. Thus, the importance of sustainable development is emphasized once again with the circular economy structure. On the other hand, foreign direct investment (FDI) comes to the fore as sustainable development strategy, especially in developing economies. In this context, it is aimed to reveal whether there is a relationship between FDI and sustainable development in Turkey between 1990-2018. Unit root test, co-integration and VECM based causality analyses are included in the estimation of the relationships between these variables by using the Eviews10. The significance of causality relationship is also questioned with variance decomposition and impulse-response analysis. According to the findings, there is a cointegration relationship between the variables and they act together in the long run. In addition, there is one-way relationship from FDI to per capita GDP and per capita energy consumption; bidirectional causality between per capita GDP and per capita energy consumption; one-way relationship from FDI to sustainable development index.

Suggested Citation

  • Canan Şentürk & Şerife Kuyun, 2021. "An Analysis of the Relationship between Foreign Direct Investment and Sustainable Development," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 6(SI), pages 33-53.
    • Handle: RePEc:ahs:journl:v:6:y:2021:i:si:p:33-53
    DOI: 10.30784/epfad.1022499
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    Citations

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    Cited by:

    1. Chimere O. Iheonu & Ekene ThankGod Emeka & Simplice A. Asongu & Princewill U. Okwoche, 2022. "Foreign Investment, International Trade and Environmental Sustainability: Exploring Ecological Footprints in 37 African Countries," Working Papers 22/068, European Xtramile Centre of African Studies (EXCAS).
    2. Aristide Karangwa & Zhan Su, 2023. "Towards a Multidimensional Model for Evaluating the Sustainable Effect of FDI on the Development of Host Developing Countries: Evidence from Africa," Sustainability, MDPI, vol. 15(5), pages 1-23, March.

    More about this item

    Keywords

    Foreign Direct Investment; Sustainable Development; Economic Growth; international economics; causality analysis;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General

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