Analyzing the Relationship between Foreign Direct Investment and Privatization in the European Union Founder Nations by Using Panel Data Approach

  • Selim Tüzüntürk Uludağ University, Faculty of Economics and Administrative Sciences, Department of Econometrics, Turkey
  • Betül İnam Uludağ University, Faculty of Economic s and Administrative Sciences, Department of Public Finance, Turkey
  • Filiz Giray Uludağ University, Faculty of Economic s and Administrative Sciences, Department of Public Finance, Turkey

Abstract

Foreign direct investment (FDI) and privatization are two of the most important component in liberalization World. The aim of this study is to analyze whether there exist a statistically significant relationship between FDI and privatization, or not. To do so, a panel data sample of fourteen European Union (EU) Founder Nations in 1998-2012 was used to estimate various Panel Data Models. The special feature of panel data is that it allows researchers to construct and test more realistic behavioral models that could not be identified using cross section or time series data alone. Based on the sample results, between privatization as the primary independent variable and FDI was found to have a statistically significant positive relationship. Although other explanatory variables such as growth, trade openness, and corruption perceptions index, were found to have statistically significant effects on FDI, budget deficit was found to be statistically insignificant. Moreover, statistically significant parameters’ signs showed that all of the economic expectations were satisfied.


Key words: Privatization, Foreign direct investment, European Union, Panel data.
JEL: L33, G28, O52, P45, F21.

How to Cite
Tüzüntürk S., İnam B., & Giray F. (2018). Analyzing the Relationship between Foreign Direct Investment and Privatization in the European Union Founder Nations by Using Panel Data Approach. Panoeconomicus, Advance online publication. doi:10.2298/PAN160106001T
Section
Original scientific paper