An empirical analysis of the relationship between foreign direct investment and unemployment rate : evidence from Turkey

Abstract

Purpose: This paper is aimed to analyze the impact of Foreign Direct Investment inflows in Turkey on macroeconomic variables among them the unemployment rate. Design/methodology/approach: The time series datasets (FDI, UEMP), were obtained from the World Bank database, which covers the time period 1980-2017 were utilized in employed statistical models as the ADF Unit Root, Philips–Perron Unit Root, Johansen co-integration, and the Granger causality tests, to accomplish the empirical part of the paper. Findings: Based on the results, it was confirmed that there was at most one presence of the co-integration among the analyzed series. Additionally, the results of Granger causality test had showed that there is unidirectional causality from FDI to UEMP. Originality: Thus, this paper can be a proof that Foreign Direct Investment inflows have a crucial impact on decreasing the unemployment rate in Turkey.