The determinants of inward foreign direct investment in Turkey

This paper mainly aims to explore the macroeconomic determinant factors and its impact on the inward foreign direct investment (FDI) in Turkey for recent years. Auto-regressive Distributed Lag (ARDL) and Unrestricted Error Correction Model (UECM) are the econometric methods that used to investigate the long-term conintegration relationships between the dependent variable and independent variables, using the quarterly data of 2005Q1-2017Q4. The study results reveal that statistically positive relationship exists between dependent variable FDI and independent variables GDP, GDP growth rate, Trade Openness, Interest Rate and Unemployment Rate in Turkey in the long-term. However, the statistically negative impact of Inflation Rate on FDI inflows in Turkey is identified through the empirical analysis. The study findings also indicate that the Real Effective Exchange Rate statistically has no effect on inward FDI in Turkey for long-term.