The Examination of the Relationship Between Foreign Direct Investment and Trade in Turkey: ARDL Approach

Ilham, Karimov Mehman; Vaqif, Nesirov Elcin; Calal, Zeynalli Elay

doi:10.2478/sues-2023-0020

Abstract

This paper is aimed to examine the effect of Foreign Direct Investment inflow on Trade (Export, Import) in Turkey. The study copes the time span from 2006 Q2 to 2019 Q4. The time series datasets, those are retrieved from CBT and FRED database are used in applied econometrical methods such as ADF, PP, Zivot Andrews Unit Root Tests, ARDL bounds testing approach, and the Granger Causality tests, to accomplish the statistical part of the research. Based on the findings, it was supported that there was a positive relationship between FDI and Trade. Additionally, the outputs of Granger causality test indicated that there is a unidirectional causality running from FDI to Trade (Export and Import).

References

Bhasin, N., Kapoor, K. (2020), Impact of outward FDI on home country exports, International Journal of Emerging Markets.
Search in Google Scholar Back to article
Cetin, M., Seker, F. (2013), Doğrudan yabancı yatırımlar ve ihracat ilişkisi: Gelişmekte olan ülkeler üzerine bir nedensellik analizi, Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 8(1), 121–142.
Search in Google Scholar Back to article
Cho, C. (2013), The causal relationship between trade and FDI: Implication for India and East Asian countries (Т. 13).
Search in Google Scholar Back to article
Dickey, D., Fuller, W. A. (1979), Distribution of the estimators for time series regressions with a unit root, Journal of the American Statistical Association, 74(366), 427–431.
Search in Google Scholar Back to article
Dunning, J. H. (1974), The distinctive nature of the multinational enterprise, Economic analysis and the multinational enterprise, 13–30.
Search in Google Scholar Back to article
Dunning, J. H. (1977), Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach. В B. Ohlin, P.-O. Hesselborn, & P. M. Wijkman (Ред.), The International Allocation of Economic Activity: Proceedings of a Nobel Symposium held at Stockholm (сс. 395–418). Palgrave Macmillan UK. https://doi.org/10.1007/978-1-349-03196-2_38.
Search in Google Scholar Back to article
Dunning, J. H. (1985), Multinational enterprises, economic structure, and international competitiveness. John Wiley & Sons Inc.
Search in Google Scholar Back to article
Dunning, J. H. (1988), The investment development cycle and Third World multinationals, Transnational Corporations and Economic Development, 3, 135–166.
Search in Google Scholar Back to article
Durgan, S., T.C. Kalkınma Bakanlığı, Ekonomik Modeller ve Stratejik Araştırmalar Genel Müdürlüğü. (2016), Türkiye’nin doğrudan yabancı yatırım potansiyelinin çekim modeli kullanılarak belirlenmesi. Kalkınma Bakanlığı.
Search in Google Scholar Back to article
Ethier, W. J. (1986), The multinational firm, The Quarterly Journal of Economics, 101(4), 805–833.
Search in Google Scholar Back to article
Ethier, W. J., Markusen, J. R. (1996), Multinational firms, technology diffusion and trade, Journal of International Economics, 41(1–2), 1–28.
Search in Google Scholar Back to article
FDISCR. (2000), Foreign direct investment special commission report, State Planning Organization.
Search in Google Scholar Back to article
Grossman, G. M., Helpman, E. (2002), Integration versus outsourcing in industry equilibrium, The quarterly journal of economics, 117(1), 85–120.
Search in Google Scholar Back to article
Helpman, E. (1984), A simple theory of international trade with multinational corporations, Journal of political economy, 92(3), 451–471.
Search in Google Scholar Back to article
Helpman, E. (1985), Multinational corporations and trade structure, The Review of Economic Studies, 52(3), 443–457.
Search in Google Scholar Back to article
Horstmann, I. J., Markusen, J. R. (1992), Endogenous market structures in international trade (natura facit saltum), Journal of International Economics, 32(1–2), 109–129.
Search in Google Scholar Back to article
Iranmanesh, N., Jalaee, S. A. (2021), Testing the long-run neutrality and supernaturality of money in a developing country: Evidence from Iran, MethodsX, 8, 101251.
Search in Google Scholar Back to article
Karimov, M. (2019), The Impact of Foreign Direct Investment on Trade (Export and Import) in Turkey, European Journal of Interdisciplinary Studies, 5(1), 6–17.
Search in Google Scholar Back to article
Lucas, R. E. (1998), On the mechanics of economic development, Econometric Society Monographs, 29, 61–70.
Search in Google Scholar Back to article
Markusen, J. R. (1984), Multinationals, multi-plant economies, and the gains from trade, Journal of international economics, 16(3–4), 205–226.
Search in Google Scholar Back to article
Markusen, J. R. (1997), Trade versus Investment Liberalization, NBER Working Paper 6231. Social Science Electronic Publishing, 77(35), 339–371.
Search in Google Scholar Back to article
Markusen, J. R. (2002), Multinational Firms and the Theory of International Trade MIT Press. Cambridge, MA.
Search in Google Scholar Back to article
Markusen, J. R., Venables, A. J. (1998), Multinational firms and the new trade theory, Journal of international economics, 46(2), 183–203.
Search in Google Scholar Back to article
Markusen, J. R., Venables, A. J. (2000), The theory of endowment, intra-industry and multi-national trade, Journal of international economics, 52(2), 209–234.
Search in Google Scholar Back to article
Metulini, R., Riccaboni, M., Sgrignoli, P., Zhu, Z. (2017), The indirect effects of FDI on trade: A network perspective.
Search in Google Scholar Back to article
Moosa, I. (2002), Foreign direct investment: Theory, evidence and practice. Springer.
Search in Google Scholar Back to article
Mukhtarov, S., Alalawneh, M. M., Ibadov, E., Huseynli, A. (2019), The impact of foreign direct investment on exports in Jordan: An empirical analysis, Journal of International Studies, 12(3).
Search in Google Scholar Back to article
Panic, M., Joyce, P. L. (1980), UK manufacturing industry: International integration and trade performance, Bank of England Quarterly Bulletin, 20(1), 42–55.
Search in Google Scholar Back to article
Pesaran, M. H., Shin, Y. (1995), An autoregressive distributed lag modeling approach to cointegration analysis.
Search in Google Scholar Back to article
Pesaran, M. H., Shin, Y., Smith, R. J. (2001), Bounds testing approaches to the analysis of level relationships, Journal of applied econometrics, 16(3), 289–326.
Search in Google Scholar Back to article
Pesaran, M. H., Smith, R. P. (1998), Structural analysis of cointegrating VARs, Journal of economic surveys, 12(5), 471–505.
Search in Google Scholar Back to article
Phillips, P. C., Perron, P. (1988), Testing for a unit root in time series regression, Biometrika, 75(2), 335–346.
Search in Google Scholar Back to article
Ramsey, F. P. (1928), A mathematical theory of saving, The economic journal, 38(152), 543–559.
Search in Google Scholar Back to article
Romer, P. M. (1986), Increasing returns and long-run growth, Journal of political economy, 94(5), 1002–1037.
Search in Google Scholar Back to article
Romer, P. M. (1990), Endogenous technological change, Journal of political Economy, 98(5, Part 2), S71–S102.
Search in Google Scholar Back to article
Savićević, M., Kostić, M. (2020), The Impact Analysis of Foreign Direct Investment on Export: The Case of the Western Balkan Countries, Economic Themes, 58(2), 171–186.
Search in Google Scholar Back to article
Simionescu, M. (2014), The relationship between trade and foreign direct investment in G7 Countries a panel data approach, Journal of Economics and Development Studies, 2(2), 447–454.
Search in Google Scholar Back to article
Solomon, R. F., Ingham, K. P. (1977), Discriminating between MNC subsidiaries and indigenous companies: A comparative analysis of the British mechanical engineering industry* xs, Oxford Bulletin of Economics and Statistics, 39(2), 127–138.
Search in Google Scholar Back to article
Solow, R. M. (1956), A contribution to the theory of economic growth, The quarterly journal of economics, 70(1), 65–94.
Search in Google Scholar Back to article
Zivot, E., Andrews, D. (1992), Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis, Journal of Business & Economic Statistics, 10(3), 251–270. https://econpapers.repec.org/article/besjnlbes/v_3a10_3ay_3a1992_3ai_3a3_3ap_3a251-70.htm.
Search in Google Scholar Back to article

The Examination of the Relationship Between Foreign Direct Investment and Trade in Turkey: ARDL Approach

Abstract

Paradigm

My account