The Relationship between Turkish Outward Foreign Direct Investment and Exports

The aim of the study is to analyze the relationship between foreign direct investment (FDI) and export with the context of substitution and complementarity . For this aim, Turkey's export data set composing HS-6 digit product level statics for period 2001 to 2012 with 82 countries has been decomposed into intermediate goods and final goods export by using the method developed by Kimura and Obashi (2010) and Obashi (2010). Then, the relationship between country - level outward FDI and export is analyzed with the gravity model. All analyzes have been performed for the exports of the total goods as well as the exports of final and intermediate goods. The empirical results for the gravity model show that there is a complementary relationship between FDI and final goods export as well as total goods export. There is no statistically significant relationship between FDI and intermediate goods export. In the second part of empirical analysis, causality test is performed. The causality results show that there is a two-way causality between FDI and export.