The influence of the taxation on foreign direct investment

The main determining variable in the growth and development processes of the countries is the savings as the source of financing. The most effective way to increase savings is to increase the foreign direct investment into the country. This is due to the fact that foreign direct investments are less costly than other types of capital transfers, but also make a direct contribution to the realization of technology transfer, the development of human resources and the enhancement of management skills. One of the most important factors affecting the decision of the foreign direct investment's location is the taxation in the host country. The parametric analysis of the effect of taxation on foreign direct investment shows whether this variable will be a policy instrument. The aim of this thesis is to research if the reduction of the effective average tax rate, which takes into account the tax parameters affecting the tax burden on foreign direct investments, as well as the reduction in the statutory tax rate, effects the foreign direct investment flows. The basic hypothesis of the thesis is that taxation is influential on foreign direct investment. Depending on the existence of the relationship between these two variables; In the period covering 2000 - 2013, the effect of taxation on foreign direct investment flows in 24 OECD countries, including Turkey, and the econometric analysis that can be used as a policy variable are presented. In this context, unlike the studies in the examined literature, it was aimed to obtain a more effective result by measuring the effect of the taxable income on the DYSY flows since the value of the assets that are active in the investment decision are calculated by using the EATR as the tax burden on investments in the panel data analysis made by eliminating the effects of the 2008 global financial crisis. Findings in the study, taking into account the effects of the crisis, support the results of similar studies in the literature. Along with the OECD countries dealt with according to the assessments derived from the literature research and the econometric analysis, Turkey has been evaluated in particular. According to this evaluation, our proposals on the characteristics of the tax policy in order to increase the FDI inflows to Turkey are presented in the conclusion. Keywords: Foreign Direct Investment, FDI, Taxation, Effective Average Tax Rate, EATR, Panel Data Analysis.