Research Information System
31st Annual Global Finance Conference, Cagliari, Italy, 18 - 20 June 2024, pp.1-14, (Full Text)
Since
FDI and portfolio investment are important sources of financing for open
economies in developing countries, shocks affecting these phenomena need to be
identified and addressed. In
recent years, geopolitical risks have been observed to have a particularly
strong impact on the economies of developing countries. Therefore, it has
become important for the economies of these countries to study the impact of
increasing geopolitical risks on FDI, portfolio investment and economic growth.
Since Türkiye is a developing country that is open to foreign trade and has a
sustainable growth target, it is important to examine the impact of
geopolitical risk on the economy of this country.
This
study aims to investigate the impact of geopolitical risk on Türkiye's FDI,
portfolio investment, economic growth, real effective exchange rate and
consumer price index. The Structural VAR (SVAR) model is used in this study and
monthly data covering the period between 2003m1 and 2023m10 are analysed.
According to the results of the study, a shock in geopolitical risk has a
decreasing effect on FDI, economic growth and the real effective exchange rate,
while it causes a significant increase in the consumer price index. The effect
of a geopolitical risk shock on portfolio investment is statistically
insignificant.