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Determinants of Turkish FDI abroad

Saime Kayam () and Mehtap Hisarciklilar

MPRA Paper from University Library of Munich, Germany

Abstract: ABSTRACT This study examines the determinants of Turkish outward FDI employing a gravity model. The model estimates the impact of traditional gravity variables, as well as openness, labour productivity, infrastructure, institutions and economic stability on FDI outflows from Turkey to 11 countries, which account for approximately 90% of Turkish outward FDI stock, over the period 1999-2005 years using panel data random effects technique. The results reveal that Turkish FDI has a market-seeking pattern with foreign markets being substituted for domestic market by Turkish firms. On the other hand, economic instability in Turkey emerges as a major deterrent of FDI outflows. Additionally, our results suggest the possibility of FDI in vertically differentiated products in host countries by Turkish investors as well as the importance of push factors.

Keywords: foreign direct investment; gravity model; panel data econometrics (search for similar items in EconPapers)
JEL-codes: C23 F21 F23 (search for similar items in EconPapers)
Date: 2009-09
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