Determinants of foreign direct investments in the mediterranean countries: A panel data analysis for Turkey

The Union for the Mediterranean agreement, which aimed at achieving a free trade and direct investment area in the Mediterranean region was initiated specifically with the Barcelona Process. Turkey has become a member of this agreement recently with the objective to increase and deepen her economic relationships with the other member countries. The empirical literature provides vast amount of studies that search the factors behind foreign direct investment but studies which focus on direct investment outflows from Turkey are quite limited. Therefore, this thesis aims at analyzing the factors that affect foreign direct investment flows to Mediterranean countries and by basing on the empirical findings, the thesis aims at deriving some conclusions for the investment outflows from Turkey to Mediterranean countries. The main empirical finding in the study is that foreign direct investment to the Mediterranean countries and imports to the same region are complement to each other. Per capita GDP, foreign debt ratio and socio-economic factors were found to affect foreign direct investment inflows to the region. In case of Turkey, investment outflows, the stability of government, investment profiles, international liquidity, foreign debt service, per capita GDP, real growth and ratio of trade account deficit to GDP in the host country are found to affect investment outflows from Turkey.