Publication

This paper analyzes Turkey's performance in attracting foreign direct investment (FDI). The paper is divided into three main sections. The first section analyzes FDI in Turkey over time and relative to Central and Eastern Europe. The second section identifies the key factors determining investment location and on the basis of these factors assesses Turkey's competitive position. The third section examines the impact of EU enlargement on FDI in Turkey and explores whether the IMF agreement is sufficient for reducing obstacles to investment. The paper concludes that Turkey has underperformed in attracting FDI due to the slow pace of privatization and political-institutional obstacles, of which chronic inflation is a manifestation.