Technological trade and foreign direct investment in Turkey: dynamic effect on economic growth

Abstract

This study analyzes the impact of trade in high-tech goods and foreign direct investment (FDI) on Turkey's economic growth over the period 1992–2022 within the framework of dynamic econometric approaches. In contrast to the existing literature, where technology-based indicators are typically examined through static models, this study incorporates shock sensitivity and time-varying dynamics. The stationarity properties of the series were examined using the ADF and Zivot–Andrews tests, while long-run relationships were analyzed through the Johansen cointegration method. Causal linkages were investigated using the Toda–Yamamoto, Hatemi–J asymmetric causality, and time-varying causality tests. The empirical findings reveal the existence of two cointegration vectors at the 5% significance level, confirming a stable long-run equilibrium relationship among the variables. The Toda–Yamamoto test indicates bidirectional causality between FDI and economic growth (χ² = 7.63, p <0.05; χ² = 18.34, p <0.01). Time-varying causality results demonstrate that the strongest FDI-led growth effects occurred during 2007–2009, whereas high-technology trade exerted a more pronounced growth impact during 2011–2017. Furthermore, the Hatemi–J test identifies significant asymmetric causal structures in response to positive and negative shocks. The originality of this study lies in examining the technology–growth nexus not only through level relationships but also through asymmetric and time-dependent dynamics. The findings suggest that sustainable economic growth in Turkey can be strengthened by promoting high-technology trade and implementing efficiency-oriented FDI policies.

Keywords: economic growth, foreign direct investment, trade in high-tech products, asymmetric causality, time-variable analyses.