The relationship between economic riskiness and foreign direct investment: The case of Turkey

The main objective of this study is reveal the connection between economic risk and first hand foreign direct investment. In the context of this goal, some empirical research have been made with econometric analysis. As a definition, first hand foreign direct investment which is included in foreign direct that is meaning the investable resource is moved to another country by individuals or instutition has certain borders aparted from another foreign investment type which is portfolio investment. Foreign direct investments besides bringing the production,technology, business knowledge and technical secrets in the country which it came, they have some disadvantages too at the same time. These investments which is hard to leave the country in the situation of a risky position the country in due to hazardous waste staying in the country which was invested is also another loss because of the decrease of life quality. In this way, first hand foreign direct investments conceptual framework is established in a large perspective. Inflation , real foreign currency and current deficit which effect the entry of first hand foreign direct investment have in hand and datas which belong to this variable are tabulated. The concept of economic risk which shows the economic infrasturacture have in hand in another chapter. Country risk which is divided into three groups as political, economical and diplomatic has big importance in international area. The connection has been explained with the components which effects the economcal risks. Important İnstitutions which makes country risk measurement has been mentioned and explanations has been given about their scoring. ICRG-PRS is at the head of credit rating institutions which measures country risk; country scores determine the direction of first hand foreign direct investment. In this study, connection between the economic risk with first hand foreign direct investment which is coutry risk component and macro economic varying has been tested through Stata 11 packet program by time series analyse. In study, first hand direct investments, real foreign currency with economic risk varying which is a lower component of country risk, inflation, and current deficit datas are used. This varyings have in hand as quarters between 2003:1-2014:4. According to model estimate results; economic risk, current deficit and inflation effects the DYSY in a positive way but the real foreign currency in a negative way. According to Granger causation test results; between the economic risk and first hand foreign direct investment determined a bivious causation connetion. In study, at the same time from DSYS to inflation and from inflation to current deficit defined one-way causation connection.