The characteristics of foreign direct investment directed to turkey and its possible effects on turkish economy

Developing countries need foreign resources besides domestic ones for both launch and also resume development. Especially foreign resources have been neccesity to eliminate vicious circles of poverty and development. Domestic savings are the only source for capital accumulation in a closed economy. But when economy liberalize ?which means a closed economy becomes an open economy- domestic investments can be also financed by foreign capital. So developing countries would like to benefit from international capital movements by applying financial liberalization programs. Developing countries has begun to open their economies to international capital movements by bearing restrictions on capital movements with the support of IMF and World Bank. This practice which is also named as globalization, financial globalization, international financial integration, accumulated in 1990s. So developing countries by applying financial liberalization programs are on the way of benefit foreign savings. Foreign direct investment (FDI) is seen as the most important source in order to benefit from foreign savings and provide economic development and growth by the whole World. With this respect, in this paper the expected results of FDI -which is seen as the main source of providing capital (foreign resource), new technology, modern know-how, manegerial skills, marketing and exportation benefits to developing countries- has been examined when it has received by home country in the context of whether the expected outcomes would appear or not. In this content if FDI can be considered as an useful approach to overcoming the lack of savings that Turkey confront has been primary discussion. With this work answer of questions has been tried to clarified such as the reasons why FDI goes developing countries, how FDI done, in which sectors FDI intensified and what kind of effects FDI causes to home countries. In this respect this disertation had encounter three sections. In order to explain economic rationality of FDI first section contains theoratical framework and information about FDI. In the second section FDI in the world and two different country case has been examined. In the third section the characteristics of FDI inflows to Turkey and its possible effects is on the way. At the last section of this paper related with FDI that is key point in the development of developing country, the assessment of the matter and suggestions that will contribute to develeopment of Turkey will be given. Key Words 1. Development 2. Financing 3. Saving 4. Foreign Capital Investments