The impact of foreign direct investment on Turkish manufacturing
In the course of the 1980s, Turkey came to recognize the need to change its attitude towards foreign investment, assigning a significant role to direct foreign investment. Hence, after the 1980s, there was a significant increase in the number of foreign firms operating in Turkey and the inf low of foreign capital to Turkey. Although the importance of foreign direct investment in the Turkish economy has been increasing, a variety of questions are far from being resolved. The important obstacle is that the available data do not let us analyze the extent and performance of foreign firms. In this study a considerable effort was made in collecting new data from foreign firms operating in the Turkish manufacturing industry. The main purpose of this study is to analyze and evaluate the economic effects of direct foreign investment on Turkish manufacturing. At the centre of our analysis has been the role of foreign firms in industrial concentration, technological choice and trade behaviour. In the first chapter we outline the main issues to be analyzed in this study and explain the method of collecting and processing data from foreign firms operating in the Turkish manufacturing industry. The second chapter discusses the theories and empirical evidence concerning the determinants of foreign direct investment. We also analyse the industrial distribution of direct foreign investment in Turkish manufacturing. In the third chapter we undertake an overview to the historical background of foreign firms and the legislation covering foreign investment in Turkey. At the beginning of the following three main chapters we analyze the performance of foreign firms in terms of those basic issues in the literature, according to the market imperfection approach, and later on we investigate the performance of foreign firms in Turkish manufacturing using our own data, supplemented by public sources of information.