Introduction

Foreign direct investment (FDI) is the driving force of the economy, like a locomotive on a train. Although this is not always the case, nevertheless, FDI is an essential tool for economic growth. FDI stimulates the country’s economy in many ways. The transfer of foreign capital, technology and experts are some of the ways in which FDI affects the country’s economy.

Turkey is a business-friendly environment located between Europe and Asia. Thanks to the developed infrastructure and a skilled and young workforce, Turkey is a good place for foreign investment. However, foreign direct investment in Turkey and portfolio investments have declined recently. Economic instability and structural deficiencies in Turkey have made foreigners reluctant to invest in Turkey. 

Turkey attracts foreign direct investment for many reasons. Besides the fact that Turkey is one of the twenty largest economies in the world, many other attributes make Turkey a center of attraction for local and foreign investors. Here are a few reasons why Turkey is a good place for FDI.

Turkey has a fast-growing economy

Turkey’s economy has been showing impressive growth since 1980. In 2020, Turkey ranked 11th in terms of GDP by purchasing power parity (PPP). In addition, foreign direct investment in Turkey increased by $290 million in March 2022. In 2021, Turkey was the second fastest growing economy among other OECD countries. The country aims to enter the top ten largest economies in the world by 2023.

Strategic location of Turkey

Turkey’s geographical position between Europe and Asia makes it a good place for FDI. Due to its strategic location, Turkey provides access to key regional markets. It serves as a bridge between Western countries and the countries of the Persian Gulf. The country’s proximity to the markets of the Middle East and the West makes it a good place to attract FDI.

Turkey has incentives for foreign investors

Among other OECD members, Turkey has one of the most liberal legal regimes for FDI. To encourage foreign investment in Turkey, the Turkish government has launched programs to stimulate startups and FDI in Turkey. The Law on Foreign Direct Investment of 2013 grants a foreign investor equal rights with a domestic investor. Thus, investors can open their business in Turkey, despite their nationality. This is one of the many advantages of investing in Turkey.

There is a skilled workforce in Turkey

Thanks to a young and educated workforce, Turkey’s workforce is a valuable asset for investors. This contradicts the aging and population decline in some European countries. The number of young people in Turkey is about 15.3% of the total population. Given the labor force in Turkey, investors can enjoy a rich reserve of labor.

Turkey has a well-developed infrastructure

Turkey’s infrastructure is wonderful. Transport, communications and modern infrastructure innovations are developed here. This makes it a center for attracting foreign investment.

Conclusion

Thanks to a fast-growing economy, a skilled workforce and a well-developed infrastructure, Turkey is a center of foreign investment. Its strategic location between Europe and Asia makes it more attractive to investors. To encourage FDI to Turkey, the Turkish government has launched investment promotion programs. However, foreign investment in Turkey has declined recently.

Since 2018, the Turkish economy has been unstable. High inflation and the currency crisis discouraged foreigners from investing in Turkey. The COVID-19 pandemic has worsened the economic situation.

The ambiguous political situation in eastern Europe has caused economic instability around the world, and Turkey has not been left out. However, Turkey’s well-developed infrastructure and investments can attract international investment in the medium term. In the long term, structural reforms and a stable economy are needed to restore direct and portfolio foreign investment in Turkey.