Effect of the country risk on foreign direct investment (Evaluation during 1984-2003 on Turkey)

VI ABSTRACT For our country that is among the developing countries, one of the present problems is not only the inadequate level of desired foreign investment in spite of the sufficient potential but also the possibility of the continuation of this situation during the following years. While the foreign investors making a decision for an investment for a country, there are a lot of evaluation criteria that they take into consideration. The leading criterion among these is the country risk. Country risk includes all the negative aspects due to the economic, political, and financial conditions. I have tried to evaluate the effects of the country risk to the direct foreign investments and gross domestic product between 1984-2003 in my thesis I present. In the first part of my thesis firstly the theories aimed to illustrate the direct foreign investment has been scrutinized, types of the foreign investment have been dwelled on, and the effects of the direct foreign investment on the economy of the countries have been assessed. Following these evaluations and assessments the latest arrangements aimed at foreign investment in our country have been dwelled on and our performance regarding to United Nation Conference On Trade and Development (UNCTAD) Organization' s published 2004 World Investment Report have been tried to be presented. In the second part of study the country risk has been defined, the historical process of the country risk evaluations have been emphasized, which criteria taken into consideration and how they are evaluated in country risk measurement methods have been examined. Afterwards principle factors that have been used by the leading country risk rating organizations have been scrutinized. In the final part of my study sellected PRS-ICRG country risk rating organization methodology has been introduced and regarding to methodology and the data of this organization our country's country risk eavaluation has been fulfilled. As a consequence in this part the relationship between country risk factors with direct foreign investments and GDP values have been evaluated by means of using correlation and regression anlyses and which factors-to what extend effect the direct foreign investments have been tried to be determined.