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Institutional quality and FDI inflows: an empirical investigation for Turkey

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  • Kechagia, Polyxeni
  • Metaxas, Theodore

Abstract

Foreign direct investment (FDI) inflows are fundamental and strong drivers of the global economic system. Mostly for the developing countries in several geographic region, the attraction of FDI is considered a catalyst for economic growth, under the condition that the recipient economies present institutional conditions that encourage foreign investors. The present study aims at providing empirical evidence and at investigating the impact of institutional quality on the amount of FDI inflows during 2002 – 2017, focusing on the case of Turkey. The country applied institutional reform programs and made significant efforts in order to attract more foreign investors. The present paper contributes to the existing knowledge since it is the first empirical research to study the impact of institutional quality indicators on the amount of FDI inflows in Turkey, using time series analysis, as well as panel data analysis in selected countries of the region. The study concludes that upgraded quality of the studied institutional indicators in Turkey, except for government effectiveness, during the specific time period is positively related to FDI inflows. Suggestions for future research and policy implications are discussed.

Suggested Citation

  • Kechagia, Polyxeni & Metaxas, Theodore, 2020. "Institutional quality and FDI inflows: an empirical investigation for Turkey," MPRA Paper 104309, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:104309
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    Cited by:

    1. Nazire Nergiz Dincer & Barry Eichengreen & Ayça Tekin‐Koru, 2022. "Manufacturing and service‐sector productivity in Turkey: A perspective from firm‐level data," The World Economy, Wiley Blackwell, vol. 45(9), pages 2698-2723, September.

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    More about this item

    Keywords

    Foreign direct investment; Institutional quality; Turkey; Case study; Time series analysis; panel data analysis;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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