The incentive effect of human capital accumulation to foreign direct investment in Turkey

With the globalization, and especially after World War II, foreign direct investments which have been made to developed and developing countries gained prominence in these countries. In this process, particularly developing countries aim to attract foreign investment to their countries in order to obtain savings, foreign exchange and technological innovations that they lack in development process. Foreign direct investment movements? contributions in variety of fields to countries where they are realized and solid examples by country display why they are desired by developing countries.Alongside acquisition of physical capital, being one of the primary difficulties of developing countries, to achieve growth and structural change, human capital has a fundamental role. As for multinational corporations which realize foreign direct investments, there are many determinants influencing their decisions of making investments. Besides diverse determining factors, both for foreign investors and for host country, human capital is of critical importance.With openness of the economy and liberalization policies, especially after 1980, international capital movements have intensified in Turkey. Besides realization of commercial openness and financial liberties, specifically after 2002, a variety of legal arrangements and encouragement policies to promote foreign direct investments have been executed. However, when compared to global trends, it is observed that desired level of foreign direct investment has not been achieved in Turkey.In the present study, starting off from the hypothesis that human capital based on vocational education encourage foreign direct investments and that there is a bidirectional causality between foreign direct investments and vocational education in the economy of Turkey, Granger causality test analysis were carried out. As a result of the performance, corresponding to confirmation of the basic hypothesis of the present study, incentive influence of human capital (as vocational education) on promoting foreign direct investment have been found as meaningful and a bidirectional causality according to Granger causality test results have been obtained.