DETERMINANTS OF PRIVATE INVESTMENT IN TURKEY: AN ARDL BOUNDS TESTING APPROACH

Abstract

The primary purpose of this research is to identify and evaluate the key drivers of private investment (PI) in Turkey. The corporate tax, private sector credit, GDP per capita, exchange rate, inflation and interest rate were chosen as predictors. These variables were analyzed using time series analysis methods and annual data for the period of 1975-2018. The cointegration relationship between the variables was investigated through the use of an Autoregressive Distributed Lag (ARDL) bound test because of theflexibility it offers with regards to the number of variables and the degree of integration between the variables. In the long run, an inverse impact of corporate taxes and inflation was observed on PI. The impact of private sector credit, GDP per capita, and exchange rate was positive on PI. However, no significant relationship was observed with interest rates. These findings offer policymakers important insights regarding decisions to promote investments in Turkey.