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EU Integration Process: Will Turkey Overcome the FDI Obstacles?

Author

Listed:
  • Mehmet Basar

    (Anadolu University, Turkey)

  • Sebnem Tosunoglu

    (Anadolu University, Turkey)

Abstract

This paper analyses Turkey's performance in attracting foreign direct investment (FDI) and highlights the key obstacles for FDI in Turkey. When compared with its main competitor countries, which includes the group of new EU member states and other candidate countries, it can be concluded that Turkey has a very low rate of FDI inflow. It can be argued that one of the major problems behind the low performance in FDI inflows is macroeconomic instability. In this paper we will also perform an empirical analysis to examine the relationship between FDIs and macroeconomic instability in the EU new member states and the candidate countries. According to the regression results, it was found that the GDP and openness have positive effects on the FDI, whereas current account balance and inflation have been found to be negative. On the other hand, the results related to external debt run opposite to our expectations.

Suggested Citation

  • Mehmet Basar & Sebnem Tosunoglu, 2006. "EU Integration Process: Will Turkey Overcome the FDI Obstacles?," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 4(2), pages 115-128.
    • Handle: RePEc:mgt:youmgt:v:4:y:2006:i:2:p:115-128
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    Citations

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    Cited by:

    1. Doina Prodan Palade, 2016. "Firm Characteristics and their Effects on Foreign Direct Investment Evidence from Romania, Republic of Moldova and Republic of Turkey," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(6), pages 119-133, DECEMBER.
    2. Keshab Bhattarai & Vipin Negi, 2020. "FDI and Economic Performance of Firms in India," Studies in Microeconomics, , vol. 8(1), pages 44-74, June.
    3. Nazire Nergiz Dincer & Barry Eichengreen & Ayça Tekin‐Koru, 2022. "Manufacturing and service‐sector productivity in Turkey: A perspective from firm‐level data," The World Economy, Wiley Blackwell, vol. 45(9), pages 2698-2723, September.
    4. Sirin, Selahattin Murat, 2017. "Foreign direct investments (FDIs) in Turkish power sector: A discussion on investments, opportunities and risks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 1367-1377.
    5. Sanchez Martin, Miguel Eduardo & Escribano Frances, Gonzalo & de Arce Borda, Rafael, 2014. "How regional integration and transnational energy networks have boosted FDI in Turkey (and may cease to do so): a case study: how geo-political alliances and regional networks matter," Policy Research Working Paper Series 6970, The World Bank.

    More about this item

    Keywords

    foreign direct investment; EU integration; determinants of FDI; panel data analysis; EU candidate countries;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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