Abstract:

Direct foreign capital investments are expected to have a positive impact on economic growth. Direct foreign investments can contribute to the increase and development of human resources by compensating their savings deficiencies in the countries where they go. By promoting technical knowledge, they can improve their marketing capabilities and management systems. Through the transfer of technology, they can increase efficiency and efficiency in production by developing new production techniques and opening them to new markets. They can increase production by directing exports to exports. Thanks to the knowledge they have, they can contribute to employment by improving the quality of the workforce and positively affect economic growth. The aim of this study is to test the relationship between foreign capital investments and economic growth directly in developing countries. For this purpose, the new generation panel, using the period 1985-2017 data of the selected 20 developing countries in the high and medium income countries, has been predicted by the relationship, integration and causality tests between foreign capital investments and economic growth directly. As a result, it was found that foreign capital direct investments in the countries concerned did not contribute to economic growth.

Abstract:

Foreign direct investments are expected to affect economic growth positively. Foreign direct investments may contribute to the increase and the development of human capital by compansating for the lack of savings; improve marketing skills and management systems through stimulating technical knowledge; increase productivity and efficiency in production through developing new production techniques by technology transfers, and entering into new markets; provide incentives to export by directing production excesses to exporting; and affect economic growth positively through increasing the quality of the labor force owing to the accumulation of knowledge. This study aims to test the relation between foreign direct investments and economic growth in developing countries. To test this relation, new generation panel econometric analysis methods, cointegration and causality tests, are applied on selected 20 developing countries out of upper-middle income countries for the period of 1985-2017. In conclusion, in these countries, foreign direct investments did not contribute to the economic growth.

Keywords: