Factors Influencing Foreign Direct Investment : The Case of Turkey

Direct foreign capital investments provide significant economic and social benefits to the investing country. In other words, for that country, it contributes to many macroeconomic developments such as the increase in demand, the efficient use of natural resources, the development of knowledge, the reduction of foreign trade deficit, and economic growth. Direct foreign capital investment offers advantages such as obtaining new market, proximity to raw material resources and providing cheap input for the country making the investment. The relationship between direct foreign capital investments in labor and the main determinants of these investments, namely per capita income, openness ratio, labor costs and inflation rate, is analyzed by econometric tests. According to the findings obtained after the analyzes; According to the Engle-Granger cointegration test, there is a long-run relationship between variables. According to the FMOLS coefficient estimate, inflation and labor cost affect foreign direct investment in the negative direction while per capita income affects the positive direction. According to the results of the Toda-Yamamoto causality test, one-way Toda and Yamamoto causality relationship exists from the openness to the direct foreign capital investments