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Can FDI Be a Panacea for Unemployment?: The Turkish Case

In: Labor and Employment Relations in a Globalized World

Author

Listed:
  • Mehtap Hisarciklilar

    (Business School, Staffordshire University)

  • Derya Gultekin-Karakas

    (Istanbul Technical University)

  • Ahmet Atil Asici

    (Istanbul Technical University)

Abstract

Foreign Direct Investment (FDI) currently constitutes the main mechanism for economic globalisation. Despite the rising integration of the Turkish economy into the global economy, FDI performance of Turkey remained lower than many other developing countries until the early 2000s. This was followed by a period of a boom in which Turkey attracted record levels of FDI inflows in her history. Accompanying these inflows, the country also achieved high rates of growth. However, high unemployment rates continued to be a major problem. This chapter seeks to explain the role of FDI inflows in job creation in Turkey at a sectoral level for the period 2000–2008. We use panel data analysis and find a positive, but weak relationship between FDI inflows and employment. Merger and acquisitions, as the dominant mode of foreign entry in Turkey, and/or the dominance of the FDI inflows in the financial sector after 2004 might be the reasons for this weak employment effect. Moreover, the tendency for the shift of foreign investment from low-tech to medium-and high-tech industries in Turkish manufacturing could lead to the negligible effect on employment.

Suggested Citation

  • Mehtap Hisarciklilar & Derya Gultekin-Karakas & Ahmet Atil Asici, 2014. "Can FDI Be a Panacea for Unemployment?: The Turkish Case," Contributions to Economics, in: Toker Dereli & Y. Pinar Soykut-Sarica & Asli Şen-Taşbaşi (ed.), Labor and Employment Relations in a Globalized World, edition 127, chapter 0, pages 43-70, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-04349-4_3
    DOI: 10.1007/978-3-319-04349-4_3
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    Citations

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    Cited by:

    1. Muhammad Shahid Hassan & Ayesha Wajid & Dawood Mamoon, 2014. "Some Non Price Factors that Fend off Unemployment in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(1), pages 29-35, January.
    2. Suborna Barua & Junnatun Naym & Hazera-Tun-Nessa, 2017. "Economic Climate, Infrastructure and FDI: Global Evidence with New Dimensions," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 16(1), pages 31-48, June.
    3. Ahmet Sekerkaya & Feyza Nur Ozkan & Gozde Gusan Kose & Dogan Akarsu, 2020. "Consumer Reactions to Technological Attributes in Product Design: A Technology Acceptance Model Perspective," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 34(2), pages 151-176.
    4. Jumhur Tegep & Eddy Suratman & Sukma Indra, 2019. "The Failure of Foreign Direct Investment to Explain Unemployment Rate and the Mediating Role of Economic Growth and Minimum Wage," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 154-161.
    5. Mosbah Lafi, 2018. "Foreign Affiliates and Technology Spillovers in the French Manufacturing Sector: An Analysis using Panel Data," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 229-242.
    6. Xinmeng Li & Dao-Zhi Zeng, 2022. "Frictional unemployment, bargaining, and agglomeration," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(1), pages 151-179, February.
    7. Halit Yanikkaya & Abdullah Altun & Pinar Tat, 2019. "Openness and Deindustrialization: A Turkish Case," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 33(2), pages 1-25.

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