The Effect of Foreign Direct Investment (FDI) Stock on Sustainable Growth in Türkiye: Endogenous Growth with ARDL Approach

This study uses an endogenous growth framework to investigate the impact of foreign direct investment (FDI) stocks on sustainable economic growth in Türkiye between 1970 and 2024. Unlike most existing literature, this analysis uses the perpetual inventory method to construct separate stocks of domestic and foreign capital, allowing the growth effects of different types of capital to be disentangled. The model also incorporates a human capital index developed by Hall and Jones (1999) and a proxy for institutional quality based on the liberal democracy index. The study uses the autoregressive dis-tributed lag (ARDL) approach to examine the short- and long-run dynamics between real GDP per worker, FDI stocks, domestic capital, human capital, and institutional quality. Furthermore, the robustness of the findings is checked using FMOLS, DOLS and CCR cointegration estimators, which suggests that the results are robust to the choice of es-timator. The results indicate that, despite some transitory positive effects in the short run, FDI stocks exert a negative and statistically significant effect on output per worker in the long run. Human capital is also found to be negatively associated with growth, whereas improvements in institutional quality are linked to higher real GDP per worker. Do-mestic capital stock does not display a robust long-run contribution to growth.