Foreign Direct Investment Operations of International Businesses and Their Impact in Turkey

Foreign Direct Investment Operations of International Businesses and Their Impact in Turkey

Omer Yurtseven (Çankaya University, Turkey), Dilek Temiz Dinç (Çankaya University, Turkey) and Aytaç Gökmen (Çankaya University, Turkey)
Copyright: © 2020 |Pages: 11
DOI: 10.4018/IJSEM.2020010101
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Abstract

The Republic of Turkey is located at the crossroads of many trade and investment routes, converging East with the West and North with the South. However, Turkey is not self-sufficient with respect to capital formation. As a result, it wishes to obtain the deficient part of the capital stock from foreign sources, mainly from foreign direct investment (FDI). The purpose of this paper is to examine the FDI inflows to the Turkish Republic and its effect on economic growth by employing the augmented Dickey-Fuller test, Phillips-Perron, Kwiatkowski, Phillips, Schmidt, Shin unit root tests, and least squares method. The results indicate that FDI inflows to Turkey bring about economic growth.
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An Overview Of International Business & International Investment

The international business operations are defined as the economic and commercial activities across the national borders. The international business operations involve the circulation of goods, services, capital, ideas and labor ship with the least possible hindrances in the world. These activities and operations affect the countries and regions economically, financially, culturally, socially and politically. International businesses consider a great deal of items when they execute their activities. The issues that international businesses are supposed to consider when they operate could be international competition, international distribution, international economics, politics, societies, culture, commerce, legal subjects, human resources and etc. along with a great deal of opportunities and risks (Çavuşgil et al., 2012).

The deepening of the international business affairs, gaining much more importance and the integration of the world markets on the global scale overlap with globalization. The economic and commercial integration of the local markets on the global scale with the increasing volume of international business activities as well as the increasing interdependence of states and institutions broadly enable the production of goods and services on the global scale (Griffin, Pustay, 1999; Çavuşgil et al., 2012; Daniels et al., 2019; Hill, Hult, 2019).

It is possible to consider the international business activities under two main headings: International trade and international investment. International trade occurs as a result of exportation and/or importation activities of businesses in the world. On the other hand, international investment occurs when a business transfers its tangible and intangible sources from home country to host country in order to constitute a long lasting and physical presence. International investment is not a fast functioning process, yet it develops gradually. International investment can be in different structures and can occur in different forms as investment as a portfolio investment in the equity shares of a corporation, licensing activities, franchising activities, joint ventures, turn-key projects and greenfield investment (Ball, McCulloch, 1990; Harrison et al., 2000; Daniels et al., 2019).

Even though the local business affairs are similar to international business affairs with respect to objectives, goals and scope, the international business operation are conducted in a differentiating environment. The environment of the international business affairs involves the important distinguishing characteristics. These distinguishing characteristics include the differentiating cross-cultural, commercial, political and financial environments of international business (Harrison et al., 2000).

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