Relations External Debt and Economic Growth: An Empirical Application Turkey (1980-2017)

Today, national savings to finance their investments are insufficient to meet the potential for underdeveloped and developing potential growth. The fact that the export levels of underdeveloped and developing countries is low caused foreign exchange scarcity. Exchange rate will be established. Theoretically, the rise in the exchange rate will increase exports and imports will decrease. However, lack of exchange rates negatively affect Turkey increased national savings and economic growth. External debt for all these reasons. Look at growth theories According to the assumptions of the classical economic growth model, the source of economic growth is investments. Investments are based on increased production. According to the Harrod-Domar model, there are investments according to growth. If we can look at the neoclassical model, it is again the investment that determines the growth rate of the output. It increased. Economic growth occurs in factors of production over a period of time. Production factors; labor, natural resources, capital and technology. External debt from external sources occurs inevitably. Although the effect of external external debt on economic growth and the relationship between these two concepts is controversial, a major reason for the studies is that high external external debt has a negative impact on economic growth.In this study, the effects of externals debt on economic growth in Turkey 1980-2017 period examined by the VAR analysis is performed using annual data. Impact response analysis was conducted within the scope of Var analysis. According to the test results, 1 standard deviation shock occurred in the external debt stock gave a positive and meaningful response in the first period and the effect of the response decreased gradually from the second period. There is no reaction of the external debt stock to a standard error in the GDP in the first period and it reacts negatively since the second period. The increase in GDP reacts to the decline in external debt stock. However, this reaction is statistically insignificant. According to the variance decomposition results, the external debt stock explains itself predominantly, while the GDP accounts for more than half of the external debt stock. In this case, the predominance of foreign debt towards GDP is determinative, in other words, causality.