FOREIGN DIRECT INVESTMENT, TRADE GLOBALISATION, RENEWABLE ENERGY, AND INDUSTRIALISATION IN TÜRKİYE

Abstract

Recently, interest in industrialisation has increased again, and re-industrialisation policies have begun to be discussed. Because empirical and theoretical evidence indicates that industrialisation plays a significant role in economic growth and development. Nevertheless, studies analysing the factors affecting industrialisation are limited. In consequence, the main purpose of this paper is to analyse the dynamics of industrialisation in Türkiye over the period 1990-2020. For this purpose, the effects of foreign direct investments (FDI), trade globalisation, and renewable energy, which are thought to affect industrialisation significantly, are investigated. The ARDL bounds test, and the Toda-Yamamoto (1995) causality test are employed in this respect. The findings prove that FDI, trade globalisation, and renewable energy consumption positively impact industrialisation in the long-run. At the same time, Toda-Yamamoto's (1995) causality test results indicate a unidirectional causality from FDI to industrialisation, bidirectional causality between renewable energy and industrialisation and no causality between trade globalisation and industrialisation. In this regard, for sustainable industrialisation, effective policies are necessary for FDI, trade globalisation, and renewable energy. In addition, FDI inflows should be directed to specific sectors.