Proceedings of the 12th International Academic Conference, Prague

THE RELATIONSHIP BETWEEN FOREIGN PORTFOLIO INVESTMENTS AND ECONOMIC GROWTH: THE CASE OF TURKEY

MEHMET MUCUK, MUSTAFA TAHIR DEMIRSEL, İBRAHIM EREM ŞAHIN

Abstract:

With the globalization process, economic, commercial and technologic boundaries have become uncertain and in this way capital transfer has been possible between different countries. Capital transfers which is realized through short term foreign portfolio investment and foreign direct investment are very important especially for the countries of which national savings are inadequate. This study examines the long run relationship between foreign portfolio investment and economic growth for Turkish economy over the period 1990-2012 within framework of cointegration. The cointegration test findings indicate that there is no relationship between these variables in the long run. According to this result, foreign portfolio investments should not only support consumption but also should be used in more productive areas.

Keywords: Foreign portfolio investments, Economic growth, Turkish economy, Cointegration

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