Government Stability, Accession to EU and Foreign Direct Investment in Turkey: A GMM Application

Bulent Esiyok

Economic Research Guardian, 2016, vol. 6, issue 2, 57-66

Abstract: The article investigates the determinants of foreign direct investment (FDI) inflows from 19 OECD countries into Turkey from 1991 to 2007. In particular, it focuses on the impact of European Union (EU) membership negotiations and government stability on increasing FDI inflows into Turkey in in the 2000s. Two-step system GMM estimation technique is used due to possible endogeneity between GDP and FDI. The empirical results show that accession to EU and restoration of government stability contribute to the increase in FDI inflows.These results imply that recent demonstrations against the government would undermine government stability and cause a fall in FDI inflows into Turkey.

Keywords: Foreign direct investment; Turkey; Government stability; EU; GMM (search for similar items in EconPapers)
JEL-codes: C23 F21 F23 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:6:y:2016:i:2:p:57-66

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