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

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  • Emel SIKLAR

    (Anadolu University, FEAS, Department of Numerical Methods, Yunus Emre Campus, 26470 Eskisehir, Turkey)

  • Ilyas SIKLAR

    (Anadolu University, FEAS, Department of Economics, Yunus Emre Campus, 26470 Eskisehir, Turkey)

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.

Suggested Citation

  • Emel SIKLAR & Ilyas SIKLAR, 2022. "Does Foreign Direct Investment Affect Macroeconomic Dynamics? An S-VAR Approach for Turkey," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 8(3), pages 85-103, 09-2022.
    • Handle: RePEc:arp:ijefrr:2022:p:85-103
    DOI: 10.32861/ijefr.83.85.103
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    References listed on IDEAS

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