Abstract
Analyzing Turkey over 2005: Q1-2017: Q4 period by ARDL approach, the study examines the growth performance of export-led, FDI-led, consumption-led, FPI-led, and investment-led strategies. The study also examines the impact of these growth strategies on various macroeconomic indicators including inflation, unemployment, and exchange rates. Results indicate that consumption-led growth strategy increases growth and unemployment without exerting statistically significant effects on any other indicators. FDI-led growth strategy positively contributes to economic growth, employment, inflation, and trade deficit. Export-led growth strategy positively contributes to economic growth, employment, external debt, and inflation. Investment-led growth strategy does not affect economic growth and employment but positively affects trade deficit and external debt. FPI-led growth strategy decreases economic growth, does not generate employment, and decreases inflation, external debt, and trade deficit.
TopDiscussion
The chapter put particular emphasis on the usage of components of aggregate demand by the policy makers to induce economic growth. To this end, we compare different growth enhancing effects of different economic growth strategies for Turkiye that would be adapted by policy makers. We particularly examine the growth enhancing effects of FDI led, FPI led, Export led, Consumption led, and Investment led growth strategies. We also examine how inflation, unemployment, trade deficit, real exchange rate and debt respond to different economic growth strategies that would be adapted.
Key Terms in this Chapter
Keynesian Model: This model explains the economic growth as an aggregate demand issue, in other words, capacity utilization issue.
Investment-Led Growth: An increase in aggregate investment will ultimately cause an increase in total output in the long-run.
FDI-Led Growth: An increase in foreign direct investment inflows will ultimately cause an increase in total output in the long-run.
FPI-Led Growth: An increase in foreign portfolio investment inflows will ultimately cause an increase in total output in the long-run.
Solow Growth Theory: This theory implies that factor supplies determine the economic growth in the long run, economy is at full employment and all savings are invested.
Consumption-Led Growth: An increase in aggregate consumption will ultimately cause an increase in total output in the long-run.
Export-Led Growth: An increase in total exports will ultimately cause an increase in total output in the long-run.