FDI inflow as an international business operation by MNCs and economic growth: An empirical study on Turkey

• We examined the FDI theory with respect to international business studies.
• Also, econometric models are applied to test the correlation between the FDI entry by MNCs in Turkey and economic development.
• No relation between the FDI entry by MNCs and economic development is detected in the short or long run in Turkey.

The issue of foreign direct investment (FDI) has been affecting the world economy for years and is a considerable subject for both developed and developing countries. FDI is the fixed form of international business operation made across the national borders made mostly by the multi national corporations (MNCs). The positive impact of FDI inflow in a host country is expected to emerge as capital accumulation, technology transfer, know-how acquisition, innovative capacity and economic growth eventually. In this study, it is aimed to address the FDI literature depending on comprehensive international publications and then to analyze the FDI inflow and GDP growth in Turkey with econometric methods.The relation between FDI inflow and GDP growth is analyzed by using the Johansen cointegration test and Granger causality analysis. Afterwards, a regression equation is estimated by using the ordinary least squares method (OLS). Prior to applying the Cointegration test, the stationarity and integration degrees of the series are determined by the augmented Dickey–Fuller test (ADF). Consequently, resting on the results of entire analysis, it is possible to mention that no significant relation is determined between the FDI inflow and GDP growth in Turkey both in the short and long run.