Turkey's FDI Policy and Chinese Foreign Direct Investments in Turkey

Abstract

The Republic of Turkey and the People's Republic of China are two countries with emerging market economies on the eastern and western borders of Eurasia. Turkey, with its notable economic improvement after the 2001 banking crisis and China, with entrenched economic reforms that have promoted the opening of its market to the world, have become attractive for international investors. Both states’ economic liberalization processes led to considerable increase in Foreign Direct Investment (FDI) although the amount of FDI is much higher for China. China, in turn, is likely to become a major investor in the coming years rather than just being an FDI magnet. This article analyses the FDI environment and recent developments in Turkey as well as indications of Chinese investments which are taking place in Turkey. The rapid expansion of the trade volume between Turkey and China, China's increasing foreign exchange reserves and its desire to enter world markets including the European market are all signalling an increase of its investments in Turkey. The implications of Chinese investments for Turkey are also discussed.