Research and development-driven foreign direct investment and its ramifications on Turkey's economic landscape : "a VECM approach"

Abstract

The purpose of this study is to empirically investigate the impact of research and development on economic growth in Turkey. Data for this study comes from the popular World Development Indicator spanning the period from 1973 to 2022. The study employed different econometric approaches such as ADF unit root, Granger causality, and VECM. The estimate of the Johansen test revealed that there is a long-run relationship among the variables as the trace test shows two cointegrations while the maximum Eigenvalue Test indicates one cointegration test result. The Granger Causality test indicates that there is a presence of causality, which runs from economic growth to the independent variables. Turkey's diverse economies account for the variations in the estimated findings of the impulse response and variance decomposition. Furthermore, the study's conclusions suggest that the Turkish government boost its R&D spending in order to promote economic expansion. Turkey can achieve sustainable economic development by putting policies in place that reward innovation and technological advancements. The potential for economic growth in the nation can also be increased by encouraging cooperation in R&D projects between the public and private sectors.