The relationship between foreign direct investment and trade: A case study for the Turkish service sector

Abstract

The aim of this study is to analyze the causal link between the inward foreign direct investments (FDI), import service sector, and export service sector over a period of time beginning with 1980 which lasts till 2012 by using the VEC Granger Causality/Block Exogeneity Wald Tests. Our findings showed that there is a bilateral causality between the import services and the inward FDI. However, there is a strong evidence of the unidirectional causality from the export services to the import services, and the inward FDI.