The Determinants of Turkish Outward Foreign Direct Investment

Abstract

The general theory of foreign direct investment (FDI) has been built on the experience of developed countries' investors. Therefore, there is an extensive amount of literature about firm behaviors in developed countries. Some researchers have started investigating why, how and when developing countries' firms engage in outward FDI. All of these studies have shown that the FDI determinants of firms in newly industrialized economies (NIEs) are different from the FDI determinants of firms in developed economies. This study investigates the entry mode and location choice determinants of Turkish firms' outward direct investments, which are operating in Central Asia, Russia and Balkan countries, over the period of 1989 to 2005. We find that these investments are associated with high levels of economic and political risks, cultural proximity and lack of ownership advantages. The main purpose of this study is to provide new evidence for these NIE's outward determinants.