BY MEHMET KAYA
The foreign direct investment (FDI) has a horizontal, even downward trend in the recent period. The majority of FDI inflows consist of real estate investments, while FDI outflows continues to increase. The country considers FDI as an important factor for growth and strives to increase it.
The basic calculation of the ratio of a country’s FDI outflow to that country’s FDI inflows is accepted as one of indicators to understand the country’s investment environment. This ratio is expected to be low in a country willing to attract FDI, although foreign investments can be affected from wide range of variables from domestic market conditions to incentives from the country’s geographical position to its labor skills.
The ratio of outflows to inflows shows an upward trend
When examining the data after 2006, the ratio of outflows to inflows stood at 10% albeit an increased in the global recession. This ratio exceeded 50% in the end of 2013 and 2014, when the country experienced a serious political crisis.
The average ratio hovered around 10% between 2002, when the country showed a high economic performance, and the global financial crisis. The ratio averaged 15.7% in the 2002-2007 period, according to the previous studies of the Economic Policy Research Foundation of Turkey (TEPAV). The average ratio saw around 24% between 2008-2009, when political problems experienced with the beginning of the global recession.
The ratio of FDI outflows to inflows has gradually increased in the recent period excluding 2014 that can be counted as exemption. The course above 40% continued in the first period of 2021.
