Abstract:

The aim of this paper is to examine whether or not the determinants of Foreign Direct Investment (FDI) differ in terms of inflows and outflows at firm level for publicly traded companies in Turkey just before witnessing 2008 global economic slowdown. A multinomial probit regression is used to analyze the determinants of inward, outward and both inward and outward FDI behavior of firms simultaneously. Findings suggest that the probability of a firm to engage in FDI activity increases with firm size, age and advertising intensity and decreases with liquidity. The higher the market share of FDI receivers in sectoral output, the more likely a firm will engage in FDI activity through spillover effects. Additionally, the probability to engage in outward FDI increases with financial constraints whereas the probability to receive inward FDI increases with profitability and decreases with capital intensity. The higher the R&D intensity, the more likely a firm is to engage in both types of FDI activity simultaneously. The results are mostly insensitive to manufacturing and non-manufacturing industry distinction.

Keywords: