Direct foreign investment in Turkish manufacturing industry

Koldaş, Tevfik
This study deals with direct foreign investment (DFI) in Turkish manufacturing industry with two main objectives: First, the reasons of the failure of Turkish economy in attracting sufficiently high levels of DFI is analysed as compared to the experiences other developing countries that have been successful on this count. Second, the impact of DFI in Turkish manufacturing industry is analysed in terms of export, employment, and technology contribution as well as the comparative behaviour of domestic and DFI firms. In addition to various data sets, the study utilized the results collected from two separate surveys that were implemented to domestic and DFI firms operating in Turkish manufacturing industry. Firstly, it turned out that the failure of Turkish economy in attracting high inflows of DFI cannot be attributed to investment climate problems, as the experiences of other developing countries have shown. Secondly, there does not seem to be a significant difference between the performances of domestic and DFI firms. While DFI seemed to contribute positively to exports, insufficient contribution of DFI on employment and negative balance of payments effects as well as the lack of its contribution in terms of research and development and innovative activities were also notable. Then, the study argues that rather than focusing solely on improvements in investment climate and liberalizing eagerly the development regime, it seems more appropriate to have a broad development strategy, in which both domestic investment and DFI are handled in an integrated approach, within the framework of appropriate industrial, trade and technology policies.


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Citation Formats
T. Koldaş, “Direct foreign investment in Turkish manufacturing industry,” Ph.D. - Doctoral Program, Middle East Technical University, 2005.