INSTITUTIONAL QUALITY, REAL INCOME AND FOREIGN DIRECT INVESTMENT RELATIONSHIP IN TURKEY

In this study, long-run relationships between institutional quality, real income and foreign direct investment examined in terms of Turkey for the period of 1990-2015 by using autoregressive distributed lag (ARDL) method. Results are as follows: i) While stationarity analysis results provide the preconditions for the ARDL cointegration test, ARDL bounds test results confirm that there is a long-run relationship between variables. ii) Increasing in real income and institutional quality positively affect foreign direct investment inflows. iii) Any deviation from the long-run equilibrium between variables is corrected about 84% for each period. The findings of this study emphasize that institutional quality is matter for foreign direct investment inflows as well. So, enhancing efforts of institutional quality encourage the foreign direct investment inflows