Foreign direct investment to Turkey and China and its effects on employment

In this research Turkey is compared to China, one of the most successful countries in the world with regards to employment rates, through the analysis of the direct contribution of FDI to the economy and employment. The 2004 data is regarded the most accurate and the data obtained from 1325 firms that took the survey for Turkey and 11625 firms for China was analyzed. In the analysis, the firms with a foreign capital of at least 51% are regarded as FDI and the employment rate per unit of capital for both countries were compared. The distribution of employment rates per unit of capital by size in these two countries demonstrates that compared to China, the employment created by companies with foreign capital with an employment rate of 11-49 is higher in Turkey (0.00323>0.00296). However, the employment created in China is higher when firms of other sizes are compared. What is more, the total employment created per unit of capital by foreign investment is also higher in China than it is in Turkey (0.00518>0.00035). The results of the research demonstrate that in Turkey FDIs create less employment per unit of capital compared to the employment created in China, with analogous results obtained in the comparison made per the size of the firms. China receives FDIs rather in labor intensive sectors whereas Turkey tends to receive FDIs in capital-intensive sectors. The capital value of enterprises with small number of employees in greater in Turkey.