Global Players from Emerging Markets: Strengthening ... - Unctad

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146 Outward Foreign Direct Investment by Enterprises from South Africa Goster, K. (2002). An assessment of the economic impact of the primary listings by South African companies on the London Stock Exchange, 1997- 2001, BusinessMap. South African Reserve Bank (2005). Quarterly Bulletin, June. References UNCTAD (2005). World Investment Report 2005: Transnational Corporations and the Internationalization of R&D. New York and Geneva: United Nations, United Nations publication, Sales No. E.05.II.D.10.
A. Introduction OFDI from Turkey has increased significantly in recent years. The bulk of Turkish OFDI is in the neighbouring countries. Most of the Turkish firms that have invested in the neighbouring area are SMEs, although large enterprises account for most of the total OFDI value. 118 A combination of “push” and “pull” factors drove Turkish OFDI. Access to markets in the neighbouring economies such as the European Union, Middle East, Caucasus and the Russian Federation and Central Asia, including North Africa and the United States, was an important pull factor. The ability of Turkish firms to exploit these market opportunities also played a role. Among the push factors, the recent domestic economic crises, including high taxes and rising labour costs, encouraged Turkish enterprises to go abroad. The improved policy environment had also facilitated the OFDI process. This paper focuses on the key issues related to OFDI by SMEs from Turkey. It provides an analysis of the current trend, drivers, motivations, market entry strategies, obstacles, and policies on OFDI. The paper draws on findings from interviews with Turkish firms by the author. * This paper was prepared by Asim Erdilek, Professor, Department of Economics, Weatherhead School of Management, Case Western Reserve University, Cleveland, United States. The author thanks Cigdem Tuzun and Altay Atli of the Foreign Economic Relations Board (DEIK), and Abdullah Akyuz and Hale Onursal of the Turkish Industrialists’ and Businessmen’s Association (TUSIAD) for their help in arranging the interviews conducted for this study and those Turkish government officials and Turkish business leaders who were interviewed. The author also thanks two anonymous referees and Raj Javalgi for their helpful comments. 118 Based on the author’s interviews with Turkish enterprises. CHAPTER XII CHAPTER VIII 147 OUTWARD FOREIGN DIRECT INVESTMENT BY ENTERPRISES FROM TURKEY* 147 B. OFDI from Turkey: Trends and development OFDI from Turkey has grown since the early 1990s. After the country’s economic downturn in 1994, Turkey’s OFDI accelerated (table 1). 119 The subsequent economic crises which occurred in 2000-2001 further pushed Turkish enterprises to go abroad. UNCTAD’s Outward FDI Performance Index, measured as the ratio of a country’s share in world FDI outflows to its share in world Gross Domestic Product (GDP), for Turkey rose from - 0.004 in 1988 to 0.104 in 2003 (table 2). The ranking of Turkey among outward investors has also changed from 87th position to 64th out of 128 countries. The improved scores registered by these indexes suggests the strengthening of ownership-specific advantages of Turkish firms, including their desire to exploit these advantages abroad for strategic reasons and the weakening of the relative locational advantages of Turkey for both national and foreign firms (UNCTAD 2004). Turkish OFDI flows as a percentage of gross fixed capital formation (GFCF) and Turkish OFDI stock as a percentage of GDP are below both the world total and developing countries percentages. However, the official OFDI data are likely to be under-reported (box 1). Geographical distribution. Some 1,500 enterprises from Turkey invested $7 billion abroad in 1992-2004 (table 3). Most Turkish OFDI went 119 UNCTAD as well as OECD data on the Turkish annual OFDI flows are those reported by the Turkish Central Bank in the Balance of Payment statistics (http://tcmbf40.tcmb.gov.tr/cbt. html). The Turkish Central Bank collects these data on a monthly basis from the foreign exchange position reports filed by Turkish banks. These data reflect currency transfers only and do not include in kind transfers that are supposed to be included in the Turkish Treasury statistics.
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Preface The landscape of internatio
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