  This paper examines the relationship between net FDI inflows and real GDP for
Turkey from 1970 to 2019. Although conventional economic growth theories and
most empirical research suggest that there is a bi-directional positive effect
between these macro variables, the results indicate that there is a
uni-directional significant short-run positive effect of real GDP on net FDI
inflows to Turkey by employing the Vector Error Correction Model, Granger
Causality, Impulse Response Functions and Variance Decomposition. Also, there
is no long-run effect has been found. The findings recommend Turkish
authorities optimally benefit from the potential positive effect of net
incoming FDI on the real GDP by allocating it for the productive sectoral
establishments while effectively maintaining the country's real economic growth
to attract further FDI inflows.
