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Government Stability, Accession to EU and Foreign Direct Investment in Turkey: A GMM Application

Author

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  • Bulent Esiyok

    (Department of Economics, Baskent University, Ankara, Turkey)

Abstract

The article investigates the determinants of foreign direct investment (FDI) inflows from 19 OECD countries into Turkey from 1991 to 2007. In particular, it focuses on the impact of European Union (EU) membership negotiations and government stability on increasing FDI inflows into Turkey in in the 2000s. Two-step system GMM estimation technique is used due to possible endogeneity between GDP and FDI. The empirical results show that accession to EU and restoration of government stability contribute to the increase in FDI inflows.These results imply that recent demonstrations against the government would undermine government stability and cause a fall in FDI inflows into Turkey.

Suggested Citation

  • Bulent Esiyok, 2016. "Government Stability, Accession to EU and Foreign Direct Investment in Turkey: A GMM Application," Economic Research Guardian, Weissberg Publishing, vol. 6(2), pages 57-66, December.
    • Handle: RePEc:wei:journl:v:6:y:2016:i:2:p:57-66
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    More about this item

    Keywords

    Foreign direct investment; Turkey; Government stability; EU; GMM;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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

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