Abstract:

This study firstly defines the relationship between fixed capital and foreign capital investments and economic growth as an optimal control problem, using a broad definition of capital through an endogenous growth model represented by a Cobb-Douglas type production function. Then, within the framework of four empirical models developed on the basis of a simple growth equation produced as a result of the solution of this problem, empirically investigates whether the changes in the rates of fixed capital investment and net capital inflows of direct investment, portfolio investment, other investment, and total investment as foreign capital investment affect the per capita GDP growth rate in the long run for the period 1980-2020 in Turkey, using the ARDL bound test. The findings show that a cointegration relationship is defined between capital investment rates and per capita GDP growth rate, but changes in fixed capital investment and foreign capital investment rates, which consist of different forms, do not significantly affect the per capita GDP growth rate in the long run, but short-term effects occur.

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