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Foreign direct investment in Turkey: regional determinants

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  • Joel Deichmann
  • Socrates Karidis
  • Selin Sayek

Abstract

The uneven regional distribution of foreign direct investment (FDI) in Turkey poses an interesting question from the perspective of multinational firms (MNFs) and policy-makers alike. This paper focuses on the factors governing the location decisions of MNFs within Turkey with specific reference to policy implications. Using a conditional logit model, it is found that agglomeration, depth of local financial markets, human capital, and coastal access dominate location decisions for the aggregate sample of foreign investors in Turkey. This study reveals no evidence that public investment is successful in attracting MNFs to particular regions. Also importantly, the location determinants vary dramatically by broad industrial category, investment composition, and origin-country characteristics, including income category and region.

Suggested Citation

  • Joel Deichmann & Socrates Karidis & Selin Sayek, 2003. "Foreign direct investment in Turkey: regional determinants," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1767-1778.
  • Handle: RePEc:taf:applec:v:35:y:2003:i:16:p:1767-1778
    DOI: 10.1080/0003684032000126780
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    References listed on IDEAS

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    1. Eduardo Fernández-Arias & Ricardo Hausmann, 2000. "Is FDI a Safer Form of Financing?," IDB Publications (Working Papers) 1318, Inter-American Development Bank.
    2. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
    3. repec:idb:wpaper:416 is not listed on IDEAS
    4. Chien-Hsun Chen, 1996. "Regional determinants of foreign direct investment in mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 23(2), pages 18-30, May.
    5. Sergio Mariotti & Lucia Piscitello, 1995. "Information Costs and Location of FDIs within the Host Country: Empirical Evidence from Italy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 815-841, December.
    6. Meredith, Lindsay N. & Maki, Dennis R., 1992. "The United States export and foreign direct investment linkage in Canadian manufacturing industries," Journal of Business Research, Elsevier, vol. 24(1), pages 73-88, January.
    7. Coughlin, Cletus C & Terza, Joseph V & Arromdee, Vachira, 1991. "State Characteristics and the Location of Foreign Direct Investment within the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 675-683, November.
    8. Guimaraes, Paulo & Figueiredo, Octavio & Woodward, Douglas, 2000. "Agglomeration and the Location of Foreign Direct Investment in Portugal," Journal of Urban Economics, Elsevier, vol. 47(1), pages 115-135, January.
    9. Blomstrom, Magnus & Kokko, Ari, 1997. "How foreign investment affects host countries," Policy Research Working Paper Series 1745, The World Bank.
    10. Shatz, Howard J. & Venables, Anthony J., 2000. "The geography of international investment," Policy Research Working Paper Series 2338, The World Bank.
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