Trade Openness, Foreign Direct Investment, and Human Capital as Drivers of Total Factor Productivity: Evidence from Türkiye
DOI:
https://doi.org/10.37241/jatss.2026.162Keywords:
total factor productivity, trade openness, Türkiye, foreign direct investmentAbstract
Introduction: This article explores the role of trade openness, foreign direct investment, human capital, and R&D in shaping total factor productivity (TFP) in Türkiye. TFP is used as an indicator of how effectively an economy transforms its inputs into output, reflecting efficiency improvements, technological capability, and resource-use performance.
Method: The analysis relies on annual time-series observations for Türkiye. The TFP series is drawn from the Penn World Table, whereas trade openness and foreign direct investment are sourced from the World Bank database. Human capital is proxied by the ratio of university graduates to total population, calculated using data from the Turkish Statistical Institute (TurkStat) and the Council of Higher Education. The R&D series is obtained from TurkStat. The empirical strategy combines Fourier ADF unit root testing, RALS Fourier ADL cointegration analysis, DOLS estimation, and Toda–Yamamoto and Fourier Toda–Yamamoto causality procedures.
Results or Findings: The results provide evidence that the variables are connected over the long run. The DOLS estimates indicate positive productivity effects for human capital, trade openness, and foreign direct investment. R&D has a positive estimated coefficient, but the effect remains statistically insignificant. The causality findings reveal a one-directional link from trade openness to TFP.
Discussion or Conclusion: The results suggest that Türkiye’s productivity performance is closely linked to external integration, foreign investment, and human capital accumulation. However, innovation efforts should be transformed more effectively into productivity gains through stronger absorptive capacity, university–industry cooperation, and technology-oriented policy design.
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