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EU Integration Process: Will Turkey Overcome the FDI Obstacles?


  • Mehmet Basar

    (Anadolu University, Turkey)

  • Sebnem Tosunoglu

    (Anadolu University, Turkey)


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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    Cited by:

    1. repec:dug:actaec:y:2016:i:6:p:119-133 is not listed on IDEAS
    2. repec:eee:rensus:v:78:y:2017:i:c:p:1367-1377 is not listed on IDEAS
    3. 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


    foreign direct investment; EU integration; determinants of FDI; panel data analysis; EU candidate countries;

    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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