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

The impact of macroeconomic variables on foreign direct investment in Nigeria

“…Through the use of the structural vector autoregressive (SVAR) model, Siklar and Siklar (2022) examined the effects of FDI on the macroeconomic dynamics of the Turkish economy. The outcomes of the economic theory show that FDI has a favorable impact on domestic investment volume and economic growth.…”