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Why Do Turkish Firms Go Abroad to Invest?


  • Yilmaz Kilicaslan

    (Anadolu University, Department of Economics)

  • Yesim Ucdogruk Gurel

    (Dokuz Eylul University, Department of Economics)

  • Gokhan Onder

    (Anadolu University, Department of Business Administration)

  • Zeynep Karal Onder

    (Anadolu University, Department of Public Finance)


The aim of this paper is to examine the determinants and localization of outward FDI (oFDI) of Turkish firms that differs from developed country MNEs with respect to firm size, technology, skills and access to information about global markets. This research is the first attempt aimed to explore especially the determinants of country/region selection of Turkish outward FDI at the firm level by using discrete choice models. The findings in this paper are based on the primary data collected by in-depth-interviews with 299 outward-investing Turkish firms operating in manufacturing, wholesale and retail trade, transportation and storage, and information and communication sectors. Our descriptive findings show that 60% of the investments are green-field. We found that 68% of the investments were made in developing countries while the developed countries attracted only 32% of Turkish investments. Our findings show that the main motivation of Turkish firms investing in other counties is willingness to reach to the larger markets (77%). Our econometric findings show that the size of the firm and the parent firm are significant factors in selecting developed countries as the host country for the investment. As the size of the firm increases, the possibility of Turkish investors to choose developed countries is diminishing, while as the size of the parent firm bets bigger, the possibility of locating the investment in developed countries is rising. The high share of foreign ownership in parent firms has a positive impact on choosing developing countries to locate the investment. It seems that foreign firms benefit from the experiences of Turkish firms operating in developing markets. Finally, while willingness to avoid from tariffs has no significant impact on the probability of investing in developed countries (including EU countries), it increases the probability of investment in the member countries of Shanghai Cooperation Organization.

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  • Yilmaz Kilicaslan & Yesim Ucdogruk Gurel & Gokhan Onder & Zeynep Karal Onder, 2019. "Why Do Turkish Firms Go Abroad to Invest?," EconWorld Working Papers 19001, WERI-World Economic Research Institute, revised Nov 2019.
  • Handle: RePEc:ana:wpaper:19001
    DOI: 10.22440/EconWorld.WP.2019.001

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    More about this item


    Outward Foreign Direct Investment; outward FDI; Probit; Logit; Turkey;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • G1 - Financial Economics - - General Financial Markets
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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