Is Turkey lagging behind Is Turkey lagging behind the legendary countries the legendary countries

of FDI?of FDI? Kalman Kalotay, UNCTADKalman Kalotay, UNCTAD

Conference on Turkey Where the Conference on Turkey Where the Opportunities Abound: On the Way to Opportunities Abound: On the Way to

SuccessSuccess21-22 February 200721-22 February 2007Swissotel, IstanbulSwissotel, Istanbul

ProloguePrologue

Thank you to:Thank you to: YASEDYASED The World BankThe World Bank The Undersecretary of TreasuryThe Undersecretary of Treasury Finans DünyasiFinans Dünyasi

DisclaimerDisclaimer The views are those of the presenter The views are those of the presenter

and do not necessarily reflect the and do not necessarily reflect the opinion of the United Nations.opinion of the United Nations.

OutlineOutline Landslide in global FDI: How the composition of inflows has Landslide in global FDI: How the composition of inflows has

changed recently changed recently Emerging countries have been resilient to the global roller coaster of Emerging countries have been resilient to the global roller coaster of

FDI inflows FDI inflows Changes in the composition of global FDI flows between 2000 and Changes in the composition of global FDI flows between 2000 and

2005: from 20 to 41% in emerging countries…2005: from 20 to 41% in emerging countries… Why the global recovery? Countries continued to liberalize FDI – Why the global recovery? Countries continued to liberalize FDI –

except in Latin America except in Latin America Why does FDI surge in emerging economies? Push and pull factorsWhy does FDI surge in emerging economies? Push and pull factors

But China is expected to attract more than Turkey and Turkey But China is expected to attract more than Turkey and Turkey more than the Czech Republic: What the UNCTAD Inward more than the Czech Republic: What the UNCTAD Inward FDI Performance Index tells usFDI Performance Index tells us What is the UNCTAD Inward FDI Performance IndexWhat is the UNCTAD Inward FDI Performance Index Turkey versus Brazil, China, India and the Russian Federation (the Turkey versus Brazil, China, India and the Russian Federation (the

global leaders)global leaders) Turkey versus the Czech Republic, Estonia and Hungary (the EU-10)Turkey versus the Czech Republic, Estonia and Hungary (the EU-10) Turkey versus Azerbaijan, Bulgaria, Georgia and Romania (the Turkey versus Azerbaijan, Bulgaria, Georgia and Romania (the

neighbourhood)neighbourhood) More lights for Turkey in outward FDI?More lights for Turkey in outward FDI?

The largest emerging-economy source countries of outward FDI stockThe largest emerging-economy source countries of outward FDI stock

How the composition of How the composition of inflows has changed inflows has changed

recentlyrecently

I. Landslide in global FDI

Emerging countries have been Emerging countries have been resilient to the global roller resilient to the global roller

coaster of FDI inflows (1993-2006)coaster of FDI inflows (1993-2006)(Millions of dollars)(Millions of dollars)

Developed economies

Developing economies

Transition economies

0

200

400

600

800

1000

1200

1400

1600

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Changes in the composition of Changes in the composition of global FDI flows between 2000 global FDI flows between 2000

and 2005and 2005 2000: 20% emerging2000: 20% emerging 2005: 41% emerging2005: 41% emerging

Czech Rep.0%

Hong Kong, China4%

China3%

Other developed countries

9%

United States23%

EU (exc. Czech Rep.)50%

Other emerging7%

Turkey0%

Brazil2%

Mexico1%

Singapore1%

EU (exc. Czech Rep.)45%

Czech Rep.1%

United States11%

Other developed countries

2%

China8%

Hong Kong, China4%

Singapore2%

Mexico2%

Brazil2%

Turkey1%

Other emerging22%

Why the global recovery?Countries continued to liberalize FDI –

except in Latin America (2005 data) (2005 data)

0%

20%

40%

60%

80%

100%

Wo

rld

Dev

elo

ped

coun

trie

s

Dev

elo

pin

g

coun

trie

s

Afr

ica

Latin

Am

eri

ca a

nd

the C

arib

be

an

As

ia a

nd O

cean

ia

Sou

th-E

ast

Euro

pe

an

d C

IS

More favourable Less favourable

Why does FDI surge in emerging Why does FDI surge in emerging economies?economies?

Push factorsPush factors: : pressure on companies to cut costspressure on companies to cut costs skill shortages in home countriesskill shortages in home countries shortage of natural resourcesshortage of natural resources

Pull factorsPull factors: : growing markets and production basesgrowing markets and production bases widening pools of talent (e.g. 1/3 of global widening pools of talent (e.g. 1/3 of global

tertiary technical students now in China, India tertiary technical students now in China, India and the Russian Federation)and the Russian Federation)

cost advantagescost advantages natural resourcesnatural resources

What the UNCTAD What the UNCTAD Inward FDI Performance Inward FDI Performance

Index tells usIndex tells us

II. But China is expected to attract more than

Turkey and Turkey more than the Czech Republic

The UNCTAD Inward FDI The UNCTAD Inward FDI Performance Index Performance Index

Measures inward FDI flows against Measures inward FDI flows against GDPGDP

Uses three-year periods to offset Uses three-year periods to offset annual fluctuations in dataannual fluctuations in data

Covers 141 economies for 1988/90 till Covers 141 economies for 1988/90 till 2003/05. (Some economies in 2003/05. (Some economies in transition could not be ranked in the transition could not be ranked in the early years for lack of data)early years for lack of data)

The index excludes tax havensThe index excludes tax havens

Turkey versus Brazil, China, India Turkey versus Brazil, China, India and the Russian Federation (the and the Russian Federation (the

global leaders)global leaders)0

20

40

60

80

100

120

140

92-94 93-95 94-96 95-97 96-98 97-99 98-00 99-01 00-02 01-03 02-04 03-05

China Brazil Russian Federation Turkey India

Turkey versus the Czech Republic, Turkey versus the Czech Republic, Estonia and Hungary (the EU-10)Estonia and Hungary (the EU-10)

0

20

40

60

80

100

120

140

92-94 93-95 94-96 95-97 96-98 97-99 98-00 99-01 00-02 01-03 02-04 03-05

Estonia Czech Republic Hungary Turkey

Turkey versus Azerbaijan, Bulgaria, Turkey versus Azerbaijan, Bulgaria, Georgia and Romania (the non-Georgia and Romania (the non-

legendary neighbourhood)legendary neighbourhood) 0

20

40

60

80

100

120

140

92-94 93-95 94-96 95-97 96-98 97-99 98-00 99-01 00-02 01-03 02-04 03-05

Azerbaijan Bulgaria Georgia Romania Turkey

III. More lights for Turkey in outward FDI?

The largest emerging-economy The largest emerging-economy source countries of outward FDI source countries of outward FDI

stockstock, 2005, 2005(Billions of dollars)(Billions of dollars)

Rank Economy Billion dollars 13Argentina 231Hong Kong, China 470 14Chile 212British Virgin Islands 123 15Indonesia 143Russian Federation 120 16Panama 134Singapore 111 17Venezuela 115Taiwan Province of China 97 18United Arab Emirates 106Brazil 72 19India 107China 46 20Colombia 98Malaysia 44 21Turkey 89South Africa 39 22Bermuda 6

10Korea, Republic of 36 23Kuwait 511Cayman Islands 34 24Bahrain 512Mexico 28 25Nigeria 5

Thank you!Visit the website of the World Investment

Report: http://www.unctad.org/wir

You can also send You can also send your questions to:your questions to:

kalman.kalotay@unctkalman.kalotay@unctad.orgad.org