The Causal Relationship Between Knowledge Spillovers and Economic Growth: The Turkish Case
The Causal Relationship Between Knowledge Spillovers and Economic Growth: The Turkish Case

Summary/Abstract: This study has pointed out the long run determinants of the foreign knowledge and it spillovers effects, which come from capital goods imports. For this purpose, we explored both short-run and long-run causal relationships between foreign knowledge spillovers and its main determinants for Turkish economy over the 1992:Q1–2007:Q3 period. Results from ARDL bounds testing approach of cointegration indicate that there is an evidence of a long-run relation between the variables (capital goods imports, foreign direct investment, GDP, fixed capital formation, exports and imports) in the model at 1% significance level. This study also investigates the causality relationship between knowledge spillovers and economic growth by using Granger causality models augmented with a lagged error-correction term. According to the results from causality models, there are a long-run Granger causality running from the independent variables to capital goods imports variable, and an unidirectional short-run causal relationship from capital goods imports to domestic investments, and an unidirectional short-run causal relationship from exports to GDP.

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