The relationship between private sector credits, value added production, foreign direct investments and economic growth in the turkic republics

Abstract

This study comprehensively investigates the causality relationship between the credits provided by the monetary sector to the private sector, value-added production and foreign direct investments and economic growth in the Turkic Republics (Azerbaijan, Kazakhstan, Kyrgyzstan and Türkiye) in the period 1995-2022 and the direction of this causality. In the study, the Dumitrescu and Hurlin causality test was used to investigate the causality relationship between the variables and the direction of causality. The aim of the study is to understand the economic growth dynamics and development processes of these countries in more depth, thus developing the necessary policy recommendations for sustainable growth. In the study, it was determined that the credits provided by the monetary sector to the private sector affect economic growth unidirectionally. In addition, it was determined that there are bidirectional causality relationships between economic growth and value-added production and foreign direct investments. These findings reveal the main driving forces of economic development in the Turkic Republics and provide important clues that will play a key role in shaping the development strategies of these countries. In this context, the study aims to contribute to the understanding of the economic and financial dynamics specific to the region and constitutes a valuable guide for policy makers.