The Importance of Geopolitical Risk and Corruption for Foreign Direct Investments: Empirial Findings for Turkey

Abstract

Foreign direct ivestment (FDI) is an essential source of capital for underdeveloped and developing countries with its positive effects on employment, technological knowledge diffusion, capital accumulation, integration into international markets, and economic growth. In addition to economic and social characteristics, institutional factors such as country risk, corruption and geopolitical risk are also noteworthy in foreign investors' country preference. According to the Kearney’s FDI Confidence Index Report (2022), the most likely risks for investors in recent years are political instability and geopolitical risks. UNCTAD (2017) report states that geopolitical risks, which are on the list of international investment threats, will have negative consequences on FDI due to their effects that reduce international cooperation. This study aims to determine the effects of geopolitical risks and control of corruption on foreign direct investments in Turkey, which is located in the geography where geopolitical risk is high. In the analysis conducted for the period 2003.Q1-2020.Q4, the Geopolitical Risk Index created by Caldara and Iacoviello (2019) and the control of corruption index, which is a country-specific institutional risk indicator, were used. According to the findings obtained by using the ARDL method, it is observed that while the control of corruption and real gross domestic product affect foreign direct investment inflows positively, geopolitical risk and inflation have a reducing effect on foreign investments.

Keywords

• Foreign direct investment
• geopolitical risk
• corruption
• Turkey

Jeopolitik Risk ve Yolsuzluğun Doğrudan Yabancı Yatırımlar için Önemi: Türkiye için Ampirik Bulgular

Öz

Doğrudan yabancı yatırımlar (DYY); istihdam, teknolojik bilgi yayılımı, sermaye birikimi, uluslararası bütünleşme ve iktisadi büyüme üzerine olumlu etkileri ile azgelişmiş ve gelişmekte olan ülkeler için önemli bir finansal kaynaktır. Ekonomik ve sosyal özelliklerin yanı sıra ülke riski, yolsuzluk, jeopolitik risk gibi kurumsal faktörler de yabancı yatırımcıların ülke tercihinde önemlidir. Kearney (2022) Doğrudan Yabancı Yatırım Güven Endeksi raporuna göre, yatırımcılar için son yıllardaki en olası riskler, siyasi istikrarsızlık ve jeopolitik risklerdir. UNCTAD (2017) raporunda uluslararası yatırım tehditleri listesine giren jeopolitik risklerin uluslararası iş birliğini azaltan etkileri nedeniyle DYY üzerinde olumsuz sonuçlar yaratacağı ifade edilmektedir. Bu çalışma, jeopolitik riskin yoğun olduğu bir coğrafyada bulunan Türkiye’de jeopolitik riskler ve yolsuzluğun DYY üzerine etkisini tespit etmeyi amaçlamaktadır. 2003.Q1-2020.Q4 dönemi için yapılan analizde, Caldara ve Iacoviello (2019) jeopolitik risk endeksi ve ülkeye özgü kurumsal bir risk göstergesi olan yolsuzluğun kontrolü endeksi kullanılmıştır. ARDL yöntemi ile elde edilen bulgulara göre, yolsuzluğun kontrolü ve reel gayri safi yurtiçi hasıla, DYY girişlerini olumlu yönde etkilerken jeopolitik risk ve enflasyonun yabancı yatırımları azaltıcı bir etkiye sahip olduğu gözlemlenmiştir.

Anahtar Kelimeler

• doğrudan yabancı yatırım
• jeopolitik risk
• yolsuzluk
• ARDL
• Türkiye

Kaynakça

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