An econometric analysis of the factors affecting foreign direct investments in Turkey

This study aims to reveal the factors affecting foreign direct investment inflows for turkey and to what extent these factors affect foreign direct investment inflows. In the study, the historical development of the concept of foreign direct investment, types of foreign direct investment, growth, innovation, employment and balance of payments factors that are thought to affect foreign direct investments, and theories explaining foreign direct investments are discussed. In addition, the variables of interest rate, exchange rates and political instability, which are thought to affect foreign direct investments, were examined by cointegration, causality, impulse-response and variance decomposition methods. Data sets belonging to the years 1996-2018 were used in the study. As a result of the research, it was found that the variables are cointegrated and that interest rates, exchange rates and political instability are the causes of foreign direct investments. according to the results of impact reaction and variance decomposition, it has been determined that shocks to interest rates are the variable that negatively and least affects foreign direct investment, and exchange rate shocks are the variable that positively and most affects foreign direct investment. In addition, political instability negatively and significantly affects foreign direct investment.