The effects of foreign direct investment, external debts and trade openness on economic growth: evidence from the Ottoman Empire 1881-1913

摘要

This paper empirically examines the impact of foreign direct investment, external debts, and trade openness on economic growth in the Ottoman Empire. The existing literature lacks a comprehensive quantitative analysis on this pattern. Indeed, a great focus was given to the Ottoman Empire history, but minimal attention was directed to the financial performance of the Ottoman economy during the last quarter of the 19th century. This study utilises the time-series technique ‘autoregressive distributed lag model’ (ARDL) on macroeconomic data for the period 1881-1914. The study reveals a significant positive effect of external debt, trade openness, and government expenditure on economic growth. The obtained results also highlight the fact that foreign direct investment and inflation showed a significant negative impact on economic growth. Our findings recommend on focusing on adopting economic policies that promote generating funds using local sources instead of relying on external funders to boost economic development.