The Effect of Foreign Direct Investment on the Local and Foreign Resources Gaps in Turkey (1970 - 2006)


Abstract A real progress during the past three decades has showed prominent economic relationships between the developed and growing countries. There was an enlargement in the foreign commercial movement, an increase in the flowing of the foreign capital, development in the technique of foreign investment (FDI), (transferring of technology, researches, promote the exports, as well as providing advices and experts and management). Turkey was one of the countries which attracted a massive amount of the foreign investment since its independence to accelerate the economic growth. The present study analyzed the complexities relating to the interaction between foreign and domestic sources of FDI in growth process of Turkey. Theories of foreign direct investment behavior and examines have been reviewed with the empirical studies about the role of them in developing the economic welfare in Turkey. The empirical analysis based on OLS, and we found; first, the FDI contribute positively to structure adjustment, and we confirmed that FDI is growth enhancing .Second, there is a direct effect of FDI in expanding the internal and external gaps in the Turkish economy.