Sánchez-Martín, Escribano and de Arce, 2014. “How regional integration and transnational energy networks have boosted FDI in Turkey”

# **8. Annex. Summary of the literature review**

## **Table 1. Studies on foreign direct investment in Turkey**

|**Authors**|**Year**|**Topic**|**Methodology**|**Theoretical**<br>**Approach/**<br>**Determinants**|**Focus**|**Conclusions - relevant results for our study**|
|---|---|---|---|---|---|---|
|Tatogluand Glaister|1998|Drivers of FDI in Turkey -<br>Locational Specific Factors|Micro - Survey<br>(factor analysis)|Location,<br>Ownership and<br>internalization<br>(OLI)|Determinants|Low cost inputs and geographical proximity are more important<br>for European investors than for the USA/UK multinationals.<br>Following Turkey's accession to the customs union with the EU<br>in January 1996 the number of FEV formations with firms from<br>EU countries is expected to increase.|
|Tatoglu and Glaister|2000|Dimensions of Western Foreign<br>Direct Investment in Turkey|Micro - Survey|Location,<br>Ownership and<br>internalization<br>(OLI)|Determinants|They specify some of the location, transaction and firm related<br>factors that are influential in the establishment of foreign<br>companies in Turkey. Still, they recognize the need to<br>complement with a macroeconomic approach|
|Tatoglu et al|2003|Determinants of Foreign<br>Ownership in Turkish<br>Manufacturing|Micro - Survey<br>(Logit regression)|(OLI)|Determinants|Country-related factors influence foreign ownership choice<br>(WOE vs JV). Turkeyshould continue liberalisation|
|Deichmannet al|2003|Location - distributional<br>patterns of FDI within Turkey|Quantitative (Logit<br>regression)|Location specific<br>factors+ Policy|Determinants|Location decision depends on the industry (productivity,<br>agglomeration) and on regional conditions (coastal access,<br>infrastructures, etc.). Public investment’s share on regional<br>GDPdoesnot seemto be an influencingfactor.|
|Lenger and Taymaz|2007|FDI and spillovers in Turkish<br>Manufacturing|Micro - Survey|(OLI)|Consequence<br>s of FDI|Foreign owned firms are on average more innovative that<br>domestic ones. They also find that the main channel of<br>spillovers is employee acquired knowledge.|
|Erdilek|2003|Comparative study of inward<br>and outward FDI flows in<br>Turkey|Political economy<br>analysis + Survey|Macroeconomic<br>determinants +<br>Policy|Performance|The author blames internal factors such as economic instability<br>and lack of willingness among politicians to attract FDI as the<br>cause of Turkey's dismalperformance in attractingFDI.|
|Tulug|2004|Drivers of FDI in Turkey|Micro - Survey|Macroeconomic<br>determinants +<br>Policy|Performance|The results indicate that economic and political instability is the<br>main deterrent to FDI.|
|Uctum and Uctum|2005|Portfolio Flows, Foreign Direct<br>Investment,Crises|Quantitative<br>(model)|Macroeconomic|Other<br>(structural<br>breaks)|FPI is vulnerable to regional contagion (Russian crisis) and<br>responds negatively to financial risk, while FDI is sensitive to<br>economic risk but is not affected by contagion. They detect<br>structural breaks inTurkeyin 1998 and 2000.|
|BasarandTosunoglu|2006|Turkishproblems to attractFDI|Quatitative<br>(multivariable)|Macroeconomic|Performance|Turkey seems to be attracting less FDI than expected,<br>probably aresult of high inflation rates andmacroinstability|
|Dumludaget al|2007|Determinants of Foreign Direct<br>Investment from an institutional<br>perspective|Quantitative (cross<br>country) and<br>questionnaire|Macroeconomic<br>determinants +<br>Policy<br>(institutional)|Determinants|Institutional improvement is needed in order to increase inward<br>FDI. In Turkey political and macroeconomic instability (related<br>to a lack of strong institutions) are seen as the most significant<br>facts that hinder higher inflow of FDI.|

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