THE RELATIONSHIP BETWEEN ECONOMIC COMPLEXITY, FOREIGN DIRECT INVESTMENT, EXPORTS, AND GROWTH IN TURKEY: AN ARDL BOUNDS TESTING APPROACH

In today's world, where global competition is increasingly shaped around knowledge-based production structures, production diversification, technological intensity, and openness to international markets play a crucial role in enabling countries to achieve sustainable economic growth. In this context, the Economic Complexity Index has emerged as a new indicator for explaining the quality of growth by reflecting the level of sophistication in a country’s export structure. On the other hand, foreign direct investment and exports are among the main external factors supporting growth in developing economies, influencing economic performance through channels such as capital accumulation, technology transfer, and global integration.

This study empirically examines the relationships between the economic complexity index, foreign direct investment, exports, and economic growth in Turkey using data from the period 1998–2023. Within this framework, the short- and long-term relationships among the variables are analyzed using the ARDL bounds testing approach. The bounds test results reveal a long-term cointegration relationship among the variables in the model at the 1% significance level. In the long run, only exports have a positive and significant effect on the economic complexity index, while in the short run, both exports and foreign direct investment significantly affect the index. The negative and significant error correction coefficient confirms the model's tendency to return to long-term equilibrium. These findings indicate that in order for Turkey to develop a more complex production structure, it should particularly focus on external growth dynamics such as exports and foreign direct investment.

In today's world, where global competition is increasingly shaped around knowledge-based production structures, production diversification, technological intensity, and openness to international markets play a crucial role in enabling countries to achieve sustainable economic growth. In this context, the Economic Complexity Index has emerged as a new indicator for explaining the quality of growth by reflecting the level of sophistication in a country’s export structure. On the other hand, foreign direct investment and exports are among the main external factors supporting growth in developing economies, influencing economic performance through channels such as capital accumulation, technology transfer, and global integration.

This study empirically examines the relationships between the economic complexity index, foreign direct investment, exports, and economic growth in Turkey using data from the period 1998–2023. Within this framework, the short- and long-term relationships among the variables are analyzed using the ARDL bounds testing approach. The bounds test results reveal a long-term cointegration relationship among the variables in the model at the 1% significance level. In the long run, only exports have a positive and significant effect on the economic complexity index, while in the short run, both exports and foreign direct investment significantly affect the index. The negative and significant error correction coefficient confirms the model's tendency to return to long-term equilibrium. These findings indicate that in order for Turkey to develop a more complex production structure, it should particularly focus on external growth dynamics such as exports and foreign direct investment.

In today's world, where global competition is increasingly shaped around knowledge-based production structures, production diversification, technological intensity, and openness to international markets play a crucial role in enabling countries to achieve sustainable economic growth. In this context, the Economic Complexity Index has emerged as a new indicator for explaining the quality of growth by reflecting the level of sophistication in a country’s export structure. On the other hand, foreign direct investment and exports are among the main external factors supporting growth in developing economies, influencing economic performance through channels such as capital accumulation, technology transfer, and global integration.

This study empirically examines the relationships between the economic complexity index, foreign direct investment, exports, and economic growth in Turkey using data from the period 1998–2023. Within this framework, the short- and long-term relationships among the variables are analyzed using the ARDL bounds testing approach. The bounds test results reveal a long-term cointegration relationship among the variables in the model at the 1% significance level. In the long run, only exports have a positive and significant effect on the economic complexity index, while in the short run, both exports and foreign direct investment significantly affect the index. The negative and significant error correction coefficient confirms the model's tendency to return to long-term equilibrium. These findings indicate that in order for Turkey to develop a more complex production structure, it should particularly focus on external growth dynamics such as exports and foreign direct investment.

In today's world, where global competition is increasingly shaped around knowledge-based production structures, production diversification, technological intensity, and openness to international markets play a crucial role in enabling countries to achieve sustainable economic growth. In this context, the Economic Complexity Index has emerged as a new indicator for explaining the quality of growth by reflecting the level of sophistication in a country’s export structure. On the other hand, foreign direct investment and exports are among the main external factors supporting growth in developing economies, influencing economic performance through channels such as capital accumulation, technology transfer, and global integration.

This study empirically examines the relationships between the economic complexity index, foreign direct investment, exports, and economic growth in Turkey using data from the period 1998–2023. Within this framework, the short- and long-term relationships among the variables are analyzed using the ARDL bounds testing approach. The bounds test results reveal a long-term cointegration relationship among the variables in the model at the 1% significance level. In the long run, only exports have a positive and significant effect on the economic complexity index, while in the short run, both exports and foreign direct investment significantly affect the index. The negative and significant error correction coefficient confirms the model's tendency to return to long-term equilibrium. These findings indicate that in order for Turkey to develop a more complex production structure, it should particularly focus on external growth dynamics such as exports and foreign direct investment.

Keywords

Economic Complexity Index, Foreign Direct Investment, Exports, Economic Growth, ARDL