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Exchange rate uncertainty and FDI inflows: the case of Turkey

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  • Burçak Polat
  • Cem Payaslıoğlu

Abstract

In this paper, using monthly data for the period of 2004--2014, we employ a Markov switching model to examine the impact of the level and volatility of real exchange rate (RER) on foreign direct investment (FDI) inflows to Turkey along with a set of control factors. Our estimation results do not support any effect of volatility or the RER. On the other hand, internal factors such as agglomeration effect, inflation, new incentive measures of 2009, and external factors such as Euro area policy interest rate and risk appetite turn out to be effective in driving FDI into the host country.

Suggested Citation

  • Burçak Polat & Cem Payaslıoğlu, 2016. "Exchange rate uncertainty and FDI inflows: the case of Turkey," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(1), pages 112-129, March.
    • Handle: RePEc:taf:raaexx:v:23:y:2016:i:1:p:112-129
    DOI: 10.1080/16081625.2015.1032312
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    References listed on IDEAS

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    2. Magdalene Williams & Ahmad Abu Alrub & Mehmet Aga, 2022. "Ecological Footprint, Economic Uncertainty and Foreign Direct Investment in South Africa: Evidence From Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Approach," SAGE Open, , vol. 12(2), pages 21582440221, April.

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