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Turkey’s Performance in Attracting Foreign Direct Investment: Implications of EU Enlargement

Author

Listed:
  • Henry Loewendahl

    (PricewaterhouseCoopers)

  • Ebru Ertugal-Loewendahl

    (Institute for Turkey-European Relations)

Abstract

This paper analyses Turkey's performance in attracting foreign direct investment (FDI). The paper is divided into three main sections. The first section analyses FDI in Turkey over time and relative to Central and Eastern Europe. The second section identifies the key factors determining investment location and on the basis of these factors assesses Turkey's competitive position. The third section examines the impact of EU enlargement on FDI in Turkey and explores whether the IMF agreement is sufficient for reducing obstacles to investment. The paper concludes that Turkey has under-performed in attracting FDI due to the slow pace of privatisation and political-institutional obstacles, of which chronic inflation is a manifestation. Structured interviews with global companies also highlighted lack of investment promotion as a major obstacle. While the IMF agreement will increase privatisation and reduce inflation, EU membership is vital if Turkey is to successfully compete for foreign investment.

Suggested Citation

  • Henry Loewendahl & Ebru Ertugal-Loewendahl, 2001. "Turkey’s Performance in Attracting Foreign Direct Investment: Implications of EU Enlargement," Economics Working Papers 008, European Network of Economic Policy Research Institutes.
    • Handle: RePEc:epr:enepwp:008
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    File URL: http://www.enepri.org/Publications/WP008.pdf
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    Citations

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    Cited by:

    1. World Bank, 2014. "Trading Up to High Income : Turkey Country Economic Memorandum," World Bank Publications - Reports 19320, The World Bank Group.
    2. Bosco Maria Giovanna, 2012. "FDI in Turkey: An Out-Of-Sample Analysis Of Unexploited Potential," Review of Middle East Economics and Finance, De Gruyter, vol. 7(3), pages 1-21, May.
    3. dumludag, devrim, 2007. "An analysis of the determinants of foreign direct investment in Turkey: the role of the institutional context," MPRA Paper 32060, University Library of Munich, Germany, revised Feb 2008.
    4. repec:aly:journl:202307 is not listed on IDEAS
    5. İlyas Şiklar & Merve Kocaman, 2018. "FDI and Macroeconomic Stability: The Turkish Case," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2018(1), pages 19-40.
    6. Pantelis Pantelidis & Efthymios Nikolopoulos, 2008. "FDI Attractiveness in Greece," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(1), pages 90-100, February.
    7. repec:kap:iaecre:v:14:y:2008:i:1:p:90-100 is not listed on IDEAS
    8. Mehmet Demirbag & Ekrem Tatoglu & Keith W. Glaister, 2010. "Institutional and Transaction Cost Influences on Partnership Structure of Foreign Affiliates," Management International Review, Springer, vol. 50(6), pages 709-745, December.
    9. Devrim Dumludag, 2008. "An analysis of the determinants of foreign direct investment in turkey: The role of the institutional context-super-1," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 10(1), pages 15-30, December.

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