Finance quality of current account deficit and role of tax policies: Sample of Turkey

In international trade, some countries are creditors and some are debtors. As a result of this situation, the concept of financing international trade comes to the fore in terms of borrower countries. Many tax policies can be used in the promotion of this financing. The current account simply represents the result of trading of goods and services that an economy has realized with other economies, and if this economy has current account deficit it clearly shows that it is owed to other economies as a result of these transactions. The financing of the deficit is provided through the capital and financial resources that enter the economy. The quality of financing depends on the maturity and shape of financing and the quality of long-term financing is considered to be higher than short- term financing. Foreign direct investment in the capital and finance account is an indication that represents the finance quality in balance of payments. Observing the trend over the years of balance of payments and economic growth results with taking into consideration the theoretical framework and definitions and discovering the periodical changes is beneficial for developing policy recommendations. The first part of the thesis deals with these issues. vii The current or past legislations which have provisions that can be assessed in the context of encouraging foreign direct investment were examined in the second part of the thesis. These legislations are important to show that tax policies which are in force or applied in the past in Turkey. There are a number of factors that affect foreign direct investment. In the third part of the thesis, the factors that are influential on foreign direct investments and which can be encouraged by tax policies have been identified by considering the balance of payments results of Turkey and tax policy proposals have been developed for them. Keywords: Balance of Payments, Direct Foreign Investments, Tax Havens, International Trade Agreements, International Economic Sanctions, Political Stability, Sustainable Economic Growth, Tax Subsidies.