Erhan ASLANOĞLU
An Analysis of Direct Investments and Economic Growth with an Application on Turkey
1996
(Supervisor: A. Suut Doğruel)

ABSTRACT

This dissertation aims to analyze the link between foreign direct investments and economic growth in a theoretical framework with an application on Turkish economy. Our theoretical hypothesis combines three different arguments. First, transnational corporations are argued to be the foremost producer of technology which is considered to be the vital input of economic growth. Therefore, it is claimed that there is a potential to be created by foreign direct investments for the economic growth of host countries. Secondly, the link between foreign direct investment , technological competence and economic growth of host countries are revealed to be interdependent. Thirdly, it is suggested that developed and only limited number of developing countries could benefit from the positive impact or spillovers of foreign direct investment. The importance of internationalization of production is stressed for the growth process of developing countries. That has linked to the analyses of foreign direct investments in Turkey as a case study. The impact or spillovers of foreign direct investments on Turkish economy and particularly on Turkish manufacturing industry have been examined using econometric models, comparing domestic and foreign firms and examining some performance indicators of foreign firms. The detailed analyses of foreign direct investments in Turkey tend to suggest that Turkey is at the crossroad. It may be among the number of developing countries having positive spillovers from foreign direct investment flows, but the reverse is also likely. The analyses is concluded that it all depends on internal dynamics and policies of Turkey.