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Foreign direct investment in Turkey: regional determinants

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The uneven regional distribution of foreign direct investment (FDI) in Turkey poses an interesting question from the perspective of multinational firms (MNFs) and policy-makers alike. This paper focuses on the factors governing the location decisions of MNFs within Turkey with specific reference to policy implications. Using a conditional logit model, it is found that agglomeration, depth of local financial markets, human capital, and coastal access dominate location decisions for the aggregate sample of foreign investors in Turkey. This study reveals no evidence that public investment is successful in attracting MNFs to particular regions. Also importantly, the location determinants vary dramatically by broad industrial category, investment composition, and origin-country characteristics, including income category and region.

Document Type: Research Article


Affiliations: 1: Bentley College, Department of International Studies, 175 Forest Street, Waltham MA 02452, USA 2: Bentley College, Department of Economics, 175 Forest Street, Waltham MA 02452, USA 3: Bilkent University, Department of Economics, Ankara, Turkey

Publication date: 2003-11-10

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