In this study, we investigate whether Foreign Direct Investment (FDI) inflows cause employment growth in Turkey? If yes, from which origin country do the FDI inflows promote more employment growth? Moreover, do the FDI inflows have more impact on skilled or unskilled employment growth? In terms of data (monthly) and methodology, we adopt FDI and employment variables for a period 2005(01)-2016(07). We use time series methods and carry out Granger causality tests. Our analyses indicate two major results. First, the origin of the great majority of FDI inflows (about 80 %) is the EU (European Union) countries. The share of Northern American countries in FDI inflows has been declining whereas the share of the Accession Countries to EU, Near and Middle East countries have been increasing. Second, we find that FDI inflows is not the Granger cause pf any employment growth, but in rare cases, the employment growth in unskilled labor is the Granger cause of the FDI inflows from some countries (EU Accession countries, Near and Middle East countries). In the light of these results, some policy suggestions can be made. Permission to FDI inflows, for instance, can be conditioned upon the creation and persistence of certain level of employment within the country. This should, indeed, be enforced via related regulations and reforms.
Key words: Foreign Direct Investment, Employment Growth, Granger Causality Article Language: EnglishTurkish
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