The Determining Factors of Foreign Direct Investment: The Case of Turkiye

Abstract

Direct investments are an important dynamic for sustainable economic growth and development. Especially developing countries need foreign capital more because their income and savings are not sufficient. Foreign direct investment is becoming increasingly important for sustainable development and stable growth. In Turkiye, national savings are not sufficient to realize investments. In order to increase foreign direct investment inflows, macroeconomic dynamics should be favorable. Therefore, determining the relationship between foreign direct investments and macroeconomic factors will make it more possible to monitor foreign investments. The aim of this study is to determine the determinants of foreign direct investments in Turkiye. In this context, exchange rate, CBRT reserves, inflation, economic growth rate and external debt data are used in this study. The study utilizes annual data for the period 1981-2021. The ARDL bounds test was used in the analysis. Findings show that exchange rate, economic growth and foreign debt are determinants of foreign direct investment.