EURODIALOGUE
Journal of International Relations, European, Economic and Social Studies
Table 1: GDP Growth Rate, Central Bank of Republic of Turkey (CBRT)
This remarkable economic growth is actually accompanied by a deeper process of transformation in the economy, which can be best captured through looking at Turkey’s fledgling Outward Foreign Direct Investment (OFDI). It is now solidly established that Turkey has joined to the ranks of capital exporting, developing countries, alongside Brazil, Russia, India, and China. (Aybar et. al., 2010) This follows the rise in Turkey’s productive capacity, foreign trade performance, and increased competitiveness in international markets. The opening up of the Turkish economy in 1980 and the deregulation, trade liberalization, and privatization that followed led to a gradual growth in inward FDI. Inward FDI was further strengthened by the signing of a Customs Union treaty with the European Union (EU) that came into force in 1996.1 Turkish trade openness in 1980 led to an increase in Turkish exports while import dependency has become an important destabilising element. On the other hand, ever increasing inward FDI in mid-2000s helped initiate outward FDI growth. This was done by increasing Turkish firms’ competitiveness through knowledge spillovers and/or by increasing competition in the 1. The customs union agreement was restricted to industrial and processed agricultural products.
Turkey on the European doorstep
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