Determinants of Turkish Fdi Abroad

ABSTRACT 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

THE ROLE OF DEVELOPMENT BANKING IN PROMOTING INDUSTRIALIZATION IN TURKEY

Development banks are influential institutions in financing development. Since their establishment back in the 19th century, development banks have played a leading role in supporting development in many countries. Despite the liberalization process of the 1980s and 1990s, development banks have continued to play an active role in financing development in the case of many countries. In the Turkish case, the performance of development banking in supporting development has varied over time. However, one feature has remained constant: development and investment credits did not contribute to the alleviation of regional imbalances even during the period of import substituting industrialization from the 1960s to 1979. Moreover, total fixed capital investments, which are the raison d’être for development banking in Turkey, have been mainly financed by commercial banks. Given the severe recession in the global economy, the development banks in Turkey may play a leading role in financing industrial and social projects. Résumé - Les Banques de développement ont joué un rôle majeur dans le finan-cement du développement dans certains pays depuis leur création au 19ème siècle. Dans le cas de la Turquie, cet appui au développement a varié dans le temps. Cependant, une caractéristique n’a pas changé : les crédits à l’inves-tissement ne contribuent pas à l’atténuation des déséquilibres régionaux, même pendant la période d’industrialisation par substitution aux importations entre les années 1960 et 1979. En outre, les investissements en capital fixe, qui sont pourtant la raison d’être des banques de développement en Turquie, ont été principalement financés par les banques commerciales. Avec la grave récession de l’économie mondiale en 2009, les banques de développement en Turquie pourraient jouer un rôle important dans le financement du secteur industriel et des projets sociaux.INSTITUTIONS AND GROWTH, DEVELOPMENT BANK, TURKEY, REGIONAL DEVELOPMENT

Cross sectoral FDI spillovers and their impact on manufacturing productivity

This paper explores the relationship between FDI spillovers and productivity in manufacturing firms in five European transition countries. The novelty of our approach lies in separating the impact of vertical linkages from services and manufacturing sectors. For this purpose, we rely on firm level data obtained from the Amadeus database and annual input-output tables. The results from a dynamic panel model reveal that local manufacturing firms benefit from the presence of foreign firms in upstream services, especially in the knowledge intensive services, and in downstream manufacturing sector while the effect of intra-industry spillovers and manufacturing forward linkages are negative. The firms’ productivity is also influenced positively by human capital and intangible assets. The results for intra-industry spillovers suggest attenuating effects for higher levels of firms’ absorptive capacity in some countries

Kosovo – EU trade relations: a dynamic panel poisson approach

To inform policy making following trade liberalisation between Kosovo and the EU within the framework of the Stabilisation and Association Agreement, we specify a gravity model to investigate Kosovo’s trade in goods with 28 EU countries, over the period 2005-2013. We reconcile competing methodological requirements by using a dynamic Poisson approach to estimation. Together, persistent trade patterns and an unfavourable combination of demand and supply elasticities suggest that trade liberalisation in isolation is not sufficient to promote exports but may need to be incorporated within a wider policy and institutional framework. In addition, our findings suggest that trade costs should be a particular focus for policy: distance has a big negative influence on Kosovo’s exports to EU countries; while diaspora communities promote Kosovo’s exports to EU markets, most likely because they offset trade costs

Buying friends? The importance of economic flows in assembling the Iraq war coalition

Economic ties between countries are likely to influence the alignment of their international policies. This paper investigates whether countries historical economic ties with the United States and their expectation of changes in future economic flows had a role in their decision to join the US-led coalition in Iraq from 2003 onwards. We use data on 115 countries over the period 2003-2009 to estimate panel random effects probit models of war coalition participation. We measure the intensity of economic ties with three variables: bilateral trade flows between the partner country and the US as well as FDI and aid flows from the US to the partner country. Our results suggest that both good trade relations prior to the conflict and the prospects of their further improvements increase the willingness of countries to join the coali- tion. In spite of the anecdotal evidence, we find no empirical evidence that the dependence on American FDI or aid affected countries decision on Iraq war participation

Human capital and international competitiveness in Europe, with special reference to transition economies

This paper assesses the impact of human capital endowments on international competitiveness in Europe, with special reference to transition economies in Central and Eastern Europe (CEE). The analysis uses longitudinal data for 27 European economies over the period 1995-2010. In line with the orthodox theory, a positive relationship is found between the labor force’s level of educational attainment and competitiveness. While in the European Economic Area (EEA17) tertiary education is the only significant education-based determinant of the export market share, in CEECs both the shares of the workforce with secondary and tertiary education are significant with the former having a greater impact. Some evidence is found for the hypothesized impact of the quality of education

Locational Drivers of FDI in MENA Countries: A Spatial Attempt

This study aims to analyze the locational drivers of FDI, with an emphasis on the role of market potential in MENA countries. Considering that the market does not necessarily comprise of the host economy but also trade opportunities in the region and in the rest of the world, this study distinguishes the country-specific, regional and trade-related market potential of the host MENA country in attracting FDI. It also examines the neighboring effects in locational choice. Using a panel of 18 countries covering the 1980-2001 time period, the model is estimated by Maximum Likelihood estimation method incorporating the possible spatial autocorrelation in the disturbances. The results imply that FDI in the MENA region is market oriented; as well as aiming at the domesic market in the host economy, it also utilises trade opportunities within the region

What causes the regional disparity of FDI in Russia? a spatial analysis

We analyse the determinants of the regional disparity of FDI inflows to Russia. The spatial distribution of FDI is attributed to regional and/or trans-regional factors. Region specific characteristics such as wage, education level, transportation as well as gross regional product, which accounts for market size, in host and alternative regions are considered to analyze the spatial interaction between regions employing spatial econometrics. We find that shocks to FDI levels in proximate regions have no effect on FDI inflows to hosts. However, FDI in a region depends on spatial market size and endowment of natural resources in alternative host regions

Fdi spillover effects on innovation activities of knowledge using and knowledge creating firms: evidence from an emerging economy

The beneficial effects of innovation for firm performance and competitiveness are well established but it has been suggested in recent years that innovation regimes differ between advanced and emerging economies. While advanced economies rely on knowledge generation, their emerging counterparts follow mainly knowledge use regime through the application of existing knowledge and technology. Climbing up the technological ladder can be helped through spillovers from foreign investors to local firms. We investigate whether FDI spillovers influence different phases of innovation process (from decision to innovate to productivity) among knowledge using and knowledge creating firms in an emerging European economy. The results show that innovation process in emerging economies is closer to imitation than creation of novel products. Local firms benefit from foreign counterparts in the early phase of innovation process. Stronger FDI effects are found on firms that undertake innovation through knowledge use than through knowledge generation