The Locational Determinants of Turkish Outward FDI in Eurasian Countries (original) (raw)

Locational Determinants of Foreign Direct Investment in an Emerging Market Economy: Evidence from Turkey

The Multinational Business Review, 2002

Over the past two decades, Turkey has recorded a substantial increase in the level of annual foreign direct investment (FDI) inflows. Building on the prior literature, this paper provides an empirical analysis of location-related determinants of FDI. This is undertaken by means of a cointegration analysis of major locational factors impacting upon the level of FDI inflows for the period 1980-1998. The evidence from this study supports the contention that while Turkey offers several location advantages to foreign investors in terms of market size, infrastructure, openness of the economy and market attractiveness, the lack of exchange rate and economic stability has hindered its efforts to harbor much higher volume of FDI.

The Location Choice of Foreign Direct Investment Within Turkey: An Empirical Analysis

This paper investigates the location choice of foreign direct investment (FDI) in Turkey over the period 1996-2003. Using FDI data at the provincial level and negative binomial model, the empirical evidence confirms that agglomeration economies and information costs are the most important determinants of FDI location in Turkey. Specifically, both foreign and domestic agglomerations and in particular urbanization economies strongly affect the location decision of foreign investors. The results also suggest that foreign investors are attracted to provinces with fast growing market, more educated labour force, high density of road network, greater public investment, milder climate, larger area and better quality of life. On the other hand, the empirical findings show that wage, productivity, labour availability, unionization, sea and air transportation, free zones and instability have no significant impacts on the location decision.

The Determinants of Turkish Outward Foreign Direct Investment

Modern Economy, 2011

The general theory of Foreign Direct Investment (FDI) has been built on the experience of developed countries' investors. Therefore, there is an extensive amount of literature about firm behaviors in developed countries. Some researchers have started investigating why, how and when developing countries' firms engage in outward FDI. All of these studies have shown that the FDI determinants of firms in newly industrialized economies (NIEs) are different from the FDI determinants of firms in developed economies. This study investigates the entry mode and location choice determinants of Turkish firms' outward direct investments, which are operating in Central Asia, Russia and Balkan Countries, over the period of 1989 to 2005. We find that these investments are associated with high levels of economic and political risks, cultural proximity and lack of ownership advantages. The main purpose of this study is to provide new evidence for these NIE's outward determinants.

Foreign direct investment in Turkey: regional determinants

Applied Economics, 2003

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.

A Comparison of Inward and Outward Foreign Direct Investment Determinants in Turkey

This study compares the outward foreign direct investments (FDI) in Turkey with inward FDI taking into account factors such as the location selection for outward FDI, the stimulus determinant of outward FDI and strategic entrance options for both inward and outward FDI. Based on surveys and interviews with 107 firms and 169 facilities five factors affecting location selection for inward FDI were found, 1) to gain presence in new markets, 2) enabling faster market entry, 3) maintaining an adequate quality control, 4) enabling faster payback on investment, and 5) economies of scale. However, the factors of outward FDI are as follows 1) the advantages of a "first mover", 2) the growth rate of the Turkish economy, 3) the level of industrial competition, 4) market size, and 5) availability of low cost inputs. Differences are observed for acquisitions, greenfield operations, joint venture or wholly owned subsidiaries.

Locational Determinants of Foreign Direct Investment in an Emerging Market Economy: Evidence From Tukey

Multinational Business Review, 2002

Over the past two decades, Turkey has recorded a substantial increase in the level of annual foreign direct investment (FDI) inflows. Building on the prior literature, this paper provides an empirical analysis of location-related determinants of FDI. This is undertaken by means of a cointegration analysis of major locational factors impacting upon the level of FDI inflows for the period 1980-1998. The evidence from this study supports the contention that while Turkey offers several location advantages to foreign investors in terms of market size, infrastructure, openness of the economy and market attractiveness, the lack of exchange rate and economic stability has hindered its efforts to harbor much higher volume of FDI.

Determinants of Turkish FDI Abroad

2007

This study examines the determinants of Turkish outward FDI employing a gravity model. The model estimates the impact of traditional gravity variables, as well as openness, labour productivity, infrastructure, institutions and economic stability on FDI outflows from Turkey to 11 countries, which account for approximately 90% of Turkish outward FDI stock, over the period 1999-2005 years using panel data random effects technique. The results reveal that Turkish FDI has a market-seeking pattern with foreign markets being substituted for domestic market by Turkish firms. On the other hand, economic instability in Turkey emerges as a major deterrent of FDI outflows. Additionally, our results suggest the possibility of FDI in vertically differentiated products in host countries by Turkish investors as well as the importance of push factors.

Determinants of Direct Foreign Investment in Turkey

Attempts to discuss a rarely debated issue in the literature of international business i.e. Turkey’s attractiveness as a manufacturing location, and examines the determinants of foreign direct investment in Turkey. After briefly concluding the main location-specific factors of Turkey, the findings of three different surveys are demonstrated. The surveys’ results suggest that overemphasis made by the Turkish officials on location-specific factors such as ``low cost labour and cheaper inputs’’ and ``geographical location’’ is a sign of mis-policy design since the major determinants of foreign direct investment seem to be factors such as ``the promising Turkish economy’’ and ``growing local market’’.

The determinants of FDI location choice in the Western Balkan countries

Post-Communist Economies, 2020

This paper examines the effects of traditional, institutional and agglomeration determinants on the choice of FDI location on a sample of six countries of the Western Balkans. We used the partial adjustment model, the static and dynamic panels, the Generalised Method of Moments (GMM) and a time series from 2007 to 2017. We have found that traditional (GDP per capita and GDP growth rate), agglomeration (urbanisation rate, foreign agglomerations in the service sector and the number of employees in the service sector) and institutional determinants (government spending) have a positive impact on the choice of FDI location. Additionally, we have concluded that the above-mentioned determinants have a positive impact on the adjustment speed towards a balanced per capita FDI stock. There is no convergence with regards to FDI; however, convergence exists with regards to the unrealised FDI stock due to the equilibrium FDI convergence.

Determinants of Foreign Direct Investment to Turkey : A Sectoral Approach

2015

Despite the growing interest in foreign direct investment (FDI), substantial uncertainty still exists regarding what stimulates foreign investors to operate in a foreign market. Besides, most of the previous studies have attributed the determinants of direct investments to locational and firm-specific factors. However, firm-specific and locational factors may vary across industries and their sub-sectors, as proposed by Dunning (1998). Using panel data for the 2007 to 2012 period, the major determinants of foreign investments into the manufacturing subsectors in Turkey are analyzed in this study. Strong evidence is found that turnover indices and new investment incentives introduced in 2009 have a positive impact on FDI; conversely, taxes, the Country Risk index of the USA, and the price of coking coal have a negative effect. The study fails to establish a significant impact of Country Risk index on Turkey and the price of natural gas.