The impact of macro-economic variables on foreign direct investment: An application in Turkey and BRICS countries

After the Second World War, the world was divided into two blocks. Then, the bloc of the countries with a liberal economy emerged from the cold war. With the end of the Cold War, a liberal economic view dominated the world and the phenomenon called globalization accelerated. Globalization is the expansion of economic, political and social relations beyond the boundaries of the state. The acceleration of liberalization in the economy brought economic globalization to the continuation. This has allowed capital to move freely between countries. The globalization of the economy led to low-interest rates and high global investments. Thus, the number of transnational enterprises increased and foreign direct investments accelerated. Economic globalization has also led to the abolition of the boundaries between financial markets and increased speculative investments. The fact that capital moves freely between countries of the world has led to the development of trade between countries and the disappearance of borders in the field of trade. There are many studies in the literature on foreign direct investments. The foreign direct investments made especially towards the developed countries until the 1990s turned to developing countries. Today, many developing countries want to attract foreign direct investments. The aim of this study is to determine the effects of macroeconomic variables on foreign direct investments. For this purpose from developing countries and give recommendations for the BRICS countries and Turkey. The study consists of three parts. In the first part, information about international capital movements is given. International capital definitions and scope are discussed. The following types of international capital movements, private capital movements, international official capital movements, direct foreign capital movements are examined. Factors affecting international capital movements are considered as attractive and repulsive factors and examined under related headings. In the second part, information on foreign direct investment is given. Direct foreign capital investments are defined and their types are discussed. Foreign direct investments are divided into four categories according to their ownership status, according to investments creating new enterprises, their place in the production chain and transfer pricing. Then, the effects of exchange rates, openness, inflation and economic growth on foreign direct investment were examined. In the third part, the analysis of the study was performed. The effects of the growth rate, openness, exchange rates, inflation and interest rates on foreign direct investments between 2000 and 2017 were investigated. It was concluded that the growth rate and openness variables did not have a statistically significant effect on foreign direct investments. Inflation has a negative effect on foreign direct investment and interest rates have a positive effect on foreign direct investment.