Research Information System
2nd International Congress on Economics and Administrative Sciences, Bishkek, Kyrgyzstan, 9 - 11 June 2021, pp.59
Foreign direct investment and human capital are seen as an important factor of economic growth for
the host country, especially for developing countries. Although there are substantial evidence of the link
between foreign direct investment and economic growth in developing countries, and the link between
human capital and economic growth, there are few studies examining the impact of economic growth
and foreign direct investment on human capital. This article examines the impact of economic growth
and foreign direct investment on human capital in Turkey using annual data from 1985-2018. According
to the results obtained by the co-integration analysis economic growth and foreign direct investment are
statistically significant have positive effects on human capital in Turkey. With Granger causality
analysis based on the Vector Error Correction Model, we test both bivarite and multivariate causal
relationships by estimating a three-variable time series model. Our bivariate causality test results show
that foreign direct investment Granger causes human capital, while economic growth does not Granger
causes human capital. Our multivariate causality test also reveals that foreign direct investment and
economic growth together Granger cause the human capital.