FOREIGN INVESTMENT IN TURKEY TRANDS & PROSPECTS

Rapidly changing dynamics of global economy both creates and restricts opportunities for countries. LDC economies, unlike more capable and flesdble industrialized country economies, have substantial difficulties i n exploring and exploiting opportunities i n an increasingly globalized world economy. Regional dynamics, both economic, social and political are the majör determinants of the opportunities and restraints i m - posed on local economies. Middle East is a very strong illustration of this fact w i t h its incredibly dynamic social, political and economic structure. This complex regional system which is renowned by its ppwerful natural resource-oil, is an arena of vast political conlicts which affect its social and economic dynamics. Although Middle East is erroneously identified w i t h oii rich economies of the region, i t offers a vast diversity i n terms of economic, social and political characteristics. This paper focus on one of those non-OPEC economies-Turkey- of the region which reflects the d i versity mentioned above. Turkish economy like many other counterparts i n the region and Third World at large is i n a long lasting econpmic development struggle. The efforts of economic liberalization and structural adjustment initiated i n 1980 created a reasonable transformation from a closed economy to an open one, of course at a substantial economic and social cost -$42 billion external debt, an official unemployment rate of 1 1% (18-20% unoffıcial), 50-70% inflation. 1980 Reform program emphasized fîexible exchange rates, an export drive, public enterprise and p r i - vatization, financial liberalization, import liberalization, and promotion of foreign direct investment. Flexible exchange rates, export drive and fınancial liberalization were tlıe focus of the reform program particularly in the fîrst half of the 1980s. Privatization and promotion of the FDI were increasingly emphasized i n the second half of the 1980s. Like many other counterparts i n LDCs, Turkish authorities recognized the inevitable role of FDI i n the development process because of i n a b i l i t y of the domestic capital accumulation to facilitate investments creating new capacities. Appreciation of the role of the FDI i n the development process, created one of the most liberalized foreign investment regimes among ali the LDC economies. W i t h this regulatory structure and her economic re¬ sources Türkiye joined the relentless game of attracting foreign investors into her territories. A fairly successful promotional activity increased the negligible extant FDI stock substantially between 1986-1990 at an annual average of 50 %. The focus of this study is to analyze this trend and question the overly optimistic expectations of the Turkish authorities about the future FDI flows. Section one reviews the current economic condition i n a retrospect. Section two analyzes the structure of the FDI i n terms of its sectoral distribution and trends. Section three builds up projections under the light of expected economic, social and political developments i n the regional markets and world markets i n general. Section three is followed by concluding remarks.