Foreign direct investments and Turkey

Means of direct foreign investment as one of the means that provides capital accumulation developing countries need in order to realize their development makes important contribution to develop competition and create jobs with knowledge of technological innovation and management information, to pay off deficits of balance of payments and growth and in financing economic development. Therefore, foreign direct investments are one of the important elements which must be evaluated for developing countries.In this study, it has been trying to analyze of direct foreign investments that play an important role in the national economy and international capital flows and regarding to developments of Turkish economy. The first section of study that consists of 3 sections constitutes the factors that lead to direct direct foreign investments. Markers, advantages and disadvantages of direct foreign investments are focused on in order to understand the reasons why companies are investing outside their home country; additionaly the theory of direct foreign investments and finally entrance ways of direct foreign investments are described. In the second part of the study, the historical development and present status of direct foreign investments in the world and developing countries are reviewed on sectoral and regional basis. In the third section, direct foreign investments which entered to Turkey and exited from Turkey has been analyzed regionally and as sectoral in the period after 1980.Turkish economy, one of the developing countries, is a country that has liberal legislation and that does not exhibit a negative attitude towards direct foreign investments. However, Turkey remains well behind the present potential in terms of potential attracting direct foreign investments. In addition, positive effects expected from the foreign capital remains inadequate turning foreign capital to areas such as privatizations, mergers and real estate purchases rather than real investment coming to our country. In this context, to investigate factors leading to failure and its solution is of great importance. Since the 1980s the reasons why the Turkish companies invest abroad is another issue to search for. Although there is no much emphasis on it, foreign investment in Turkey is increasing in the last period. In our country which capital is insufficient, so the various reforms are made to attract foreign capital, the foreign investments of Turkish companies are assessed as capital flight. It appears that in order to increase efficiency of Turkish foreign investments it is required to encourage domestic investment and foreign investment should be based on a public policy.Key Words: Capital Flows, Foreign Direct Investments, Capital Outflows, Developing Countries, Turkish Economy.