Abstract:

Many developing countries need external resources for economic growth. However, the COVID 19 epidemic further deepened the economic problems that arose in Turkey in the late 2010s. Due to the lack of internal savings in the Turkish economy, it is inevitable that the private and public sector experience a recovery process linked to external debt. Accordingly, the revelation of the relationship between external debt and economic growth will provide important clues and advice for policy makers. In this context, the study aims to empirically analyze the impact of foreign debt on economic growth in the Turkish economy. The results of the analysis show that external debt decreases economic growth in the long term. However, external debt has no statistically significant impact on economic growth in the short term. Furthermore, although in the long term there is a one-way causal relationship from external debt to economic growth, in the short term there is a one-way causal relationship from economic growth to external debt.

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