Turkey's geopolitical location of importance and impact on foreign direct investment of granger causality analysis in the evaluation framework

When the general macroeconomic indicators of developing countries are analyzed, it is a known fact that the savings levels remain low. Therefore, foreign direct investments are seen as an important condition for these countries to ensure growth and especially employment. Foreign direct investments (FDI) are key to Turkey's realization of many economic goals, especially in terms of providing many advantages such as capital accumulation, technology transfer, balance of payments and contribution to employment. In this respect, FDIs are the subject of many economic researches, but especially economic determinants as well as political determinants are the focus of many studies. The aim of this study is to reveal the causality relationship between total FDI and total FDI in services and industry, which is a geopolitical risk factor for Turkey. Accordingly, the relationship between the geopolitical risk index developed by Dario Caldara and Matteo Iacoviello and foreign direct investments was analyzed for Turkey using monthly data for the years 2005M01-2020M05. As a result of the Granger causality test, it was determined that there is a statistically significant and bi-directional causality relationship between the geopolitical risk index and the industrial sector and total foreign direct investments, but there is no causality relationship in the direction of foreign direct investments to the service sector. It has been concluded that the geopolitical location is an important factor for the industrial sector and foreign direct investments. Keywords: Foreign Direct Investment, Turkey, Geopolitical Risk Index, Granger Causality Analysis