Browsing by Author "Sohrabji, Niloufer"

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Citation - WoS: 2
Factors Influencing Foreign Direct Investment Flows into Turkey
(Cracow Univ Economics, 2019) Oğuş Binatlı, Ayla; Sohrabji, Niloufer
Objective: Foreign direct investment (FDI) is an important determinant of development. Thus, identifying the main drivers of investment is critical especially for emerging markets. The main aim of the article is to verify factors influencing FDI flows into Turkey. Research Design & Methods: Foreign investment can be affected by structural factors, such as growth and trade openness; stability factors, such as high fiscal deficits, inflation, and exchange rate changes; and global factors, such as the EU accession and the level of global liquidity. We examine the importance of these variables in affecting FDI flows into Turkey using quarterly data from 1992 to 2010 and cointegration and VECM methodology. Findings: We conclude that for Turkey (and perhaps other emerging markets) structural reforms that expand market size and trade opportunities yield more capital inflows than economic stabilisation efforts that address prices, exchange rates, and budget balances. Moreover, we find that during that period in Turkey, trade and investment were substitutes. Implications & Recommendations: Stabilisation efforts to control prices, exchange rates, and budgets matter, but not as much as structural reforms that impact market potential and trade flows. Contribution & Value Added: Previous literature generally finds that FDI and trade are complements in emerging countries. This was the case in Turkey as well in the eighties and early nineties. We show that the EU candidacy prospects have transformed the relationship between FDI and trade in Turkey.
Citation - WoS: 5
Citation - Scopus: 9
Intertemporal Solvency of Turkey's Current Account
(Savez Ekonomista Vojvodine, 2012) Oğuş Binatlı, Ayla; Sohrabji, Niloufer
We test for sustainability of Turkey's current account position between 1987 and 2009 using the intertemporal solvency model of Craig S. Hakkio and Mark Rush (1991) and Steven Husted (1992). According to this approach, the intertemporal budget constraint is satisfied if there is cointegration between exports and imports+ (which include imports, net interest income and unilateral transfer payments). We test for, and find evidence of, cointegration using the standard Johansen test as well as the Allan W. Gregory and Bruce Hansen (1996) test. The latter allows for a structural break in the cointegrating relation. Further, dynamic GLS estimation shows a statistically significant relation between exports and imports+, although, we reject strong current account sustainability. Our evidence suggests that Turkey remains vulnerable to reversals in capital flows, but we believe this vulnerability will diminish as the service component of trade increases.
Citation - WoS: 12
Citation - Scopus: 18
On the Optimality and Sustainability of Turkey's Current Account
(Physica-Verlag Gmbh & Co, 2008) Oğuş Binatlı, Ayla; Sohrabji, Niloufer
We analyze Turkey's current account optimality and sustainability between 1992 and 2004. Using the intertemporal benchmark model for Turkey's current account we test for its intertemporal solvency. Based on traditional and alternative tests (which account for persistence in the current account), we conclude that Turkey breached the intertemporal solvency condition in the sample period. In addition, stationarity tests of the deviation between actual and optimal net external liabilities series confirm that Turkey's current account deficit was unsustainable for that period. However, further econometric investigation and analysis of reforms causes us to question our conclusions of non-optimality and unsustainability of the Turkish current account for the latter part of the period.