EFFECT OF FOREIGN DIRECTINVESTMENTS ON ECONOMICGROWTH: AN EMPIRICAL ANALYSIS

In this study effects of foreign direct investments (FDI) on economic growth wereanalysed by bounds testing approach (ARDL) developed by Pesaran et al. (2001)in the sample of Turkey by using the data of 1991:Q4-2013:Q1 periods. The seriesof goods and services exports which was thought to effect thegrowth were alsoincluded in the analysis. At the analysis result it was foundthat series werecointegrated. According tothe empirical findings, the effect of foreign directinvestments and exports on economic growth were observed as statisticallysignificant and positive in accordance with our theoretical expectations. However,the effect of foreign direct investments isconsiderably at low level. In short termanalysis coefficient of error correction term was found statisticallysignificant andnegative. Therefore, deviations occurred among variables converge to equilibriumlevel