An analysis of foreign investment in Turkey

Abstract

This study attempts to clarify two important subjects on foreign capital in Turkey. First one is a comparison of the performance of firms with foreign capital and firms with domestic capital. And second one is trend and distribution of foreign capital entry. Four different point of view are considered, namely historical development of foreign capital in Turkey, distribution of foreign capital between sectors and countries, comparison of performance of foreign and domestic owned firms, finally determination of labor productivity differences between foreign and Turkish owned firms. An increasing trend in the annual entries of foreign capital is reported in this study. Moreover it is found out that tourism, basic chemicals, petroleum, rubber, iron and steel, mining and metal goods are highly preferred sectors. In addition, it is seen that foreign owned firms have higher performance than their domestic rivals. Six economic parameters namely labor productivity, capital-labor ratio, wage level, wage share of value added, profitability and value added-capital ratio are used in this comparison. Most of the selected samples are indicating a higher performance by the foreign owned firms than their domestic rivals.