Direct Investments and Current Account Balance: A Sectoral Overview
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Title: |
Direct Investments and Current Account Balance: A Sectoral Overview | |
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Number: |
21/37 |
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Author(s): |
Kazim Azim Özdemir, Ahmet Adnan Eken, Didem Yazıcı |
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Language: |
Turkish |
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Date: |
December 2021 |
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Abstract: |
In this study, the relationship between Turkey’s sectoral foreign direct investment (FDI) and the current account balance (CAB) is analyzed. Using the local projection (LP) method developed by Jorda (2005), the dynamic effects of FDI inflows on the current account balance are analyzed quarterly and cumulatively. A negative relationship is observed between total FDI and CAB. This dynamic impact is also confirmed for the industrial sectors and the service sectors as a whole. As for the sub-sectors, FDI in eight sub-sectors positively contributes to the CAB in the long term. FDI in all other sub-sectors has a cumulative negative impact on CAB. | |
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Keywords: |
Foreign direct investment, Current account balance, Local projection | |
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JEL Codes: |
F21; F43; C32 | |