FOREIGN DIRECT INVESMENT AND SOCIOECONOMIC CONDITIONS The Case of Turkey

Economic development is not enough to improve social development. Social indicators, such as poverty, unemployment, income distribution, health and education are the key elements which show the quality of the life in society. An analysis of country development that does not include social parameters is insufficient and unrealistic. Foreign direct investment (FDI) and its impact on the economy is one of the most studied issues during the past few decades but there is still an untouched area in the literature concerning the relationship between socioeconomic conditions and FDI. With this paper, we investigate the social parameters as well as economic parameters for testing the relationship between FDI and socioeconomic conditions, using Turkish data. The results show that there is a cointegrating vector between FDI and socioeconomic conditions. This indicates that there is long run equilibrium relation between the two variables. The error correction model indicates that in the short-run there is causality between socioeconomic condition and FDI. Socioeconomic conditions have a positive and significant effect on FDI