Determinants of Turkish outward foreign direct investment

Abstract

Outward investments from Turkey have been rising rapidly since 2002, rendering it one of the large emerging market outward investors. This study aims to investigate the main drivers behind Turkish outward investments. This is done so by using a specific OLS method, empirically testing the importance of factors determining the multi-national Enterprises’ (MNEs) investment strategies. The tests use official data covering the period of 2002–2011. Our findings indicate that market-seeking motive is an important factor driving Turkish Outward Foreign Direct Investments (OFDI) which is conditioned by the domestic economic conjunctures. We also find that as well as economic factors such as profit seeking, cultural proximity, bilateral trade agreements and natural resource endowments play important role in the geographical preferences of the Turkish MNEs. Finally, we document that Turkish OFDI has different motivations for EU and non-EU countries.

Keywords:

• Outward FDI
• Turkey
• Turkish multinational firms

Disclosure statement

The authors report no conflicts of interest. The authors alone are responsible for the content and writing of this article.