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Article
How Have FDI Flows Effected to Current Account Balance: In Turkey Case
Author(s)
Taner Akçaci, Onur Akkaya
Full-Text PDF
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DOI:10.17265/1537-1514/2012.12.003
Affiliation(s)
Taner Akçaci, Assistant Professor, Dr., Department of Economics, University of 7 Aralık.
Onur Akkaya, Ph.D. Research Student, School of Economics, University of Surrey.
ABSTRACT
The purpose of this paper is to study the foreign direct investment flows of Turkey contributed to fragility to financial crisis by causing chronic current account deficits and was concerned with a slowdown in export growth prior to the financial crisis. This recommends that when analyzing a country’s fragility to financial crisis, underscore should not only be placed on the reversibility of flows furthermore on the macroeconomic effect of these flows. The data set used for the empirical analysis in this paper consists of annual observations extending from 1982 to 2008 on Foreign Direct Investment (FDI) and Current Account (CA) in the Turkish economy. All variables are expressed in US Dollar ($). Data were obtained from IMF Database (2010). The empirical evidence shows that foreign direct investment influent directly to current account balance. However, current account balance does not impressive to foreign direct investment. These reasons are merging with economics weakness and slowdown in export growth rate. Current account deficit is growth faster than past. Finally, the post-financial crisis impacts are deeply than the preliminary-financial crisis impacts for Turkey.
KEYWORDS
Foreign Direct Investment (FDI), current account balance, variability, Turkey
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