International Conference on Eurasian Economies
20-22 September 2022 – Baku - AZERBAIJAN
Paper properties
Paper ID : 2615
Status : Paper published
Language : Turkish
Topic : Growth and Development
Presenter: Asst. Prof. Dr. Damira Baigonushova
Presentation Location : online
Session : 2B Büyüme
Foreign Capital Inflows and Economic Growth in the Eurasian Economic Union Countries
Avrasya Ekonomik Birliği Ülkelerinde Yabancı Sermaye Girişleri ve Ekonomik Büyüme
- Asst. Prof. Dr. Junus Ganiev (Kyrgyz-Turkish Manas University, Kyrgyzstan)
- Asst. Prof. Dr. Tezcan Abasız (Zonguldak Bülent Ecevit Üniversitesi, Türkiye)
- Asst. Prof. Dr. Damira Baigonushova (Kyrgyz-Turkish Manas University, Kyrgyzstan)
Abstract
The theoretical foundation for foreign capital-led growth hypothesis could be traced back to the neoclassical and endogenous growth theories, which see capital as the main source of growth. Foreign capital inflows are important because they close the savings-investment gap in developing countries. After independence, the Eurasian Economic Union countries, which were faced with the problem of inadequacy of domestic resources for economic development, became highly dependent on foreign sources and gave great importance to foreign aid and foreign debt, as well as to foreign investments. When viewed proportionally, the share of foreign aid is naturally low, and infrastructure investments constantly increase the external debt burden of future generations. On the other hand, although foreign direct investments contribute to the country’s economy, they do not directly increase the country’s debt burden. Therefore, it is considered as a more preferred foreign source. In this study, the effects of foreign investments and total external debt on economic growth in the EAEU countries were investigated. The quarterly data of five countries for the period of 2010-2021 were analyzed by panel data analysis. According to the panel ARDL cointegration approach, it has been revealed that there is a cointegration relationship between external resources and GDP in the EAEU countries. It has been determined that only foreign direct investments and total foreign debt have a statistically significant effect on GDP in the long run. In accordance with the general literature and theory, both coefficients were positive.
JEL codes: O40, F35, F21
Ganiev, Junus, Abasız, Tezcan, Baigonushova, Damira (2022). "Foreign Capital Inflows and Economic Growth in the Eurasian Economic Union Countries" in Proceedings of International Conference of Eurasian Economies 2022, pp.165-170, Baku - AZERBAIJAN.
DOI: https://doi.org/10.36880/C14.02615
