The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries.

Öz: Fiyat istikrarının öncelikli makroekonomik hedef haline gelmesi ile birlikte, Satın Alma Gücü Paritesi hipotezinin (SAGP) geçerliliği Abstract: Due to price stability has been a privileged macro-economic target, the validity of purchasing power parity (PPP) hypothesis attracted more attentions in recent studies. The aim of this study is to examine the validity of purchasing power parity hypothesis for emerging markets (India, Brazil, Indonesia, Turkey, and South Africa)

The process of financial liberalization, which has become widespread in the world since the 70s, has provided a positive contribution to the level of financial development of economies, as well as a basis for increasing the level of financial fragility. Turkey also joined the financial liberalization movement after 1980 and switched to full liberalization in 1989. Successive crises after 1990 were the lessons of the liberalization process for the Turkish financial system. Having evaluated these lessons well after the 2001 crisis, Turkey has been one of the economies that emerged from the 2008 global crisis with the least damage. In this study, in which the financial development Index and the financial fragility index were calculated for the period 2007-2019 using the Principal Component Analysis technique, the relations between these two indices were examined using the ARDL (boundary test) approach. The findings show that while the level of financial development is increasing in Turkey, financial fragility is gradually decreasing. This situation emphasizes the importance of legal and institutional regulations appeared in the financial sector.

This paper investigates the relations among short-term capital inflows, government deficit, interest rate differentials, real exchange rate and some accounts of the balance of payments in Turkey in 1990s by using the vector autoregression (VAR) technique. The dynamic behaviours of each variable due to random shocks given to short-term foreign liabilities are captured by impulse response functions, and the portion of variance in the prediction for each variable in the system that is attributable to its own innovations and to shocks to other variables in the system is analysed by variance decomposition method. It is found that the policy of high interest-low exchange rate (hot money) is the main reason for the short-term capital inflows in Turkey, and we propose some main controls on capital inflows to limit some of the macroeconomic repercussions of these inflows.

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