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A Comparative Analysis of FDI in Terms of “Quantity” and “Quality”: Turkish Case

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  • Ayca SARIALIOGLU HAYALI

    (Karadeniz Tekcnical University, Faculty of Economics and Administrative Sciences, Department of Economics)

Abstract

Developing countries offer incentives, such as “financial and tax incentives”, to encourage Foreign Direct Investment (FDI) in any case by focusing on the “quantity” of FDI rather than its “quality”. The study maintains that Turkey constitutes a typical developing country in terms of both her relatively liberalized policies aiming at attracting FDI in quantity and her failure about not attracting sufficient FDI compared to the other countries, both developed and developing. On the other hand, the study argues that it is not a typical developing country in terms of attracting “the right quality of FDI”, which is tackled here in terms of “the entry mode of FDI”. The aim of this study is to investigate these arguments through comparisons of FDI inflows to Turkey with the others in terms of both its “quantity” and “quality”. According to this, while the “greenfield investments” as an entry mode of FDI dominates the FDI inflows to developing countries, “brownfield investments” take the dominance in Turkish case. When it is looked at the year base data this finding seems consistent with the mass privatisation era of Turkey started in 2004. The study uses UNCTAD (2010)’s new database on cross-border Merger&Acquisitions (M&As) and obtain greenfield investment data.

Suggested Citation

  • Ayca SARIALIOGLU HAYALI, 2012. "A Comparative Analysis of FDI in Terms of “Quantity” and “Quality”: Turkish Case," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 12(3), pages 285-300.
    • Handle: RePEc:ege:journl:v:12:y:2012:i:3:p:285-300
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    References listed on IDEAS

    as
    1. Narula, Rajneesh & Marin, Anabel, 2003. "FDI spillovers, absorptive capacities and human capital development: evidence from Argentina," Research Memorandum 018, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    2. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
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    More about this item

    Keywords

    FDI; greenfield investment versus brownfield investment; Turkish case;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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