THE RELATIONSHIP BETWEEN RISKINESS OF COUNTRY AND FOREIGN DIRECT INVESTMENT INFLOWS: A CASE OF TURKEY

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Foreign direct investments (FDI), play an important role in the development of country economics. It is believed that country risk and macro economic variables have significant effect on flow of these investments. The purpose of this study is to investigate whether there is a relationship among foreign direct investment and country rating, some of the macroeconomic variables in Turkey. For this purpose for the period of 1992:Q1-2010:Q4, the relationships among FDI and country risk, openness, foreign trade deficit, gross domestic product (GDP), political risk and reel exchange rate are econometrically analyzed by employing Johansen cointegration analysis and error correction model. According to the results, FDI is negatively effected politic risk and foreign trade deficit and positively by country rating GDP variables. There is no meaningful ralationship betwen FDI and foreign trade deficit, reel exchange rate. Econometrics findings shows that there is unidirectional causality only among political risk, country rating and FDI.

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Foreign direct investment , country risk , error correction , causality analysis

Journal Of Economics and Administrative Sciences, Ataturk University

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Journal Of Economics and Administrative Sciences, Ataturk University