Foreign Direct Investment in European Union
Members Poland,
Romania, Bulgaria and Non-EU member
Turkey
Okan Büyükbay
&
Oğuzhan Şahin
Introduction
 By starting 1980’s importance of foreign direct
investment has been rise in European economy and also
rest of the world.
Introduction
 By starting 1980’s importance of foreign direct
investment has been rise in European economy and also
rest of the world.
 By becoming more integrated relations between member
states of European Union and other developed countries
transfer of tangible and intangible assets rise which refers
to foreign direct investment rise too.
Introduction
 By removing tariffs, quotas and barriers, capital
movement increased between member states.
Introduction
 By removing tariffs, quotas and barriers, capital
movement increased between member states.
 In other words, globalization and liberalization process
increased privatization which impact on foreign direct
investment.
Introduction
 By removing tariffs, quotas and barriers, capital
movement increased between member states.
 In other words, globalization and liberalization process
increased privatization which impact on foreign direct
investment.
 With the enlargement of European Union while market
sharing increased also trade increased too, however every
member states effected differently because of their
economical structures and features.
Introduction
 In this presentation Poland which became a member of
the European Union in 2004 and also Romania and
Bulgaria which they became a member in 2007 will be
examining to understand how being a member of the
European Union effects their foreign direct investments
and lastly it will be compare with Turkey’s FDI flows
during the accession period because those countries
economic structures approximately same with Turkey.
Poland and FDI
 After the WW2 approximately 45 years Poland isolated
itself because of communist tradition.
Poland and FDI
 After the WW2 approximately 45 years Poland isolated
itself because of communist tradition.
 Therefore, it can be say that central planning economy,
internal development policies, political and ideological
factors made investors to not invest in Poland until the
late 1980’s.
Poland and FDI
 After the WW2 approximately 45 years Poland isolated
itself because of communist tradition.
 Therefore, it can be say that central planning economy,
internal development policies, political and ideological
factors made investors to not invest in Poland until the
late 1980’s.
 Also under controlled foreign trades in Poland effected
exporting sectors because producers only export their
products by using interagents which limited numbers of
foreign trade companies.
Poland and FDI
 That caused non-relations between exporters of Poland
and importers abroad. Therefore, there were not efficient
and sustainable trade relations with Poland in that period.
Poland and FDI
 That caused non-relations between exporters of Poland
and importers abroad. Therefore, there were not efficient
and sustainable trade relations with Poland in that period.
 Between 1980-1989 economical growth rate
approximately 0,12%. There were radical changes in
political and economical issues in the late 1980’s and in
1989 elections communism removed in Poland.
Poland and FDI
 That caused non-relations between exporters of Poland
and importers abroad. Therefore, there were not efficient
and sustainable trade relations with Poland in that period.
 Between 1980-1989 economical growth rate
approximately 0,12%. There were radical changes in
political and economical issues in the late 1980’s and in
1989 elections communism removed in Poland.
 Between 1990-1991 economy decline 7% however those
radical changes brought 5% economical growth between
1991-2000.
Poland and FDI
 According to table below unfortunately with the global
stagnation in 2001 economical growth of Poland in 2001
1,2 % and in 2002 1,4% which means that growth rate
declining step by step.
Poland and FDI
 By opening market reforms, following transparency
politics and being a member of OECD in 1996, NATO in
1999 and EU in 2004, Poland economy effected between
1990-2006 as a result of this effect Poland FDI flows
reached 100billion $ in 2006.
Poland and FDI
 By opening market reforms, following transparency
politics and being a member of OECD in 1996, NATO in
1999 and EU in 2004, Poland economy effected between
1990-2006 as a result of this effect Poland FDI flows
reached 100billion $ in 2006.
 According to table below, it can be say that 96% of FDI
flows came from OECD countries and 89% FDI came
from European countries to Poland between 2000-2005.
Poland and FDI
Poland and FDI
 Moreover, in Poland, there was an investment incentives
for foreign investors, therefore 14 private economic area
established to decline regional economic differences and
making an investment incentives for both foreign
investors and domestic investors.
Poland and FDI
 Moreover, in Poland, there was an investment incentives
for foreign investors, therefore 14 private economic area
established to decline regional economic differences and
making an investment incentives for both foreign
investors and domestic investors.
 In addition to this, Poland derived benefit from European
Union structural funds such as;
Poland and FDI
 Moreover, in Poland, there was an investment incentives
for foreign investors, therefore 14 private economic area
established to decline regional economic differences and
making an investment incentives for both foreign
investors and domestic investors.
 In addition to this, Poland derived benefit from European
Union structural funds such as;
-European Social Funds
Poland and FDI
 Moreover, in Poland, there was an investment incentives
for foreign investors, therefore 14 private economic area
established to decline regional economic differences and
making an investment incentives for both foreign
investors and domestic investors.
 In addition to this, Poland derived benefit from European
Union structural funds such as;
-European Social Funds
-Regional Development Funds
Poland and FDI
 Moreover, in Poland, there was an investment incentives
for foreign investors, therefore 14 private economic area
established to decline regional economic differences and
making an investment incentives for both foreign
investors and domestic investors.
 In addition to this, Poland derived benefit from European
Union structural funds such as;
-European Social Funds
-Regional Development Funds
- Agricultural and Fishing Funds
Poland and FDI
 So far, it can be say that those factors birngs economical
development and it provides more investment from
investors.
Poland and FDI
According to graph above, it can be say that FDI inwards, increase by starting 2004 and
reached highest level.
Romania and FDI
 Like every other former Soviet Union country, Romania
was also governed by central planned economy.
Romania and FDI
 Like every other former Soviet Union country, Romania
was also governed by central planned economy.
 Therefore, closed economy caused financial problems
such as;
Romania and FDI
 Like every other former Soviet Union country, Romania
was also governed by central planned economy.
 Therefore, closed economy caused financial problems
such as;
-High deficit
Romania and FDI
 Like every other former Soviet Union country, Romania
was also governed by central planned economy.
 Therefore, closed economy caused financial problems
such as;
-High deficit
-Decreasing of money supply
Romania and FDI
 Like every other former Soviet Union country, Romania
was also governed by central planned economy.
 Therefore, closed economy caused financial problems
such as;
-High deficit
-Decreasing of money supply
 So these brought unstable economical conditions to
Romania.
Romania and FDI
 After the collapse of communist regime in Romania, by
starting in 1989 step by step Romania’s economy shifted
to free market economy.
Romania and FDI
 After the collapse of communist regime in Romania, by
starting in 1989 step by step Romania’s economy shifted
to free market economy.
 However, there was a stagnation period between 19902000 in Romania because of deficent reforms both in
politics and economics.
Romania and FDI
 According to table below, it can be say that after 2002
FDI flows increases and reached highest level in 2006
approximately 9 billion Euro.
Romania and FDI
 In addition to this, according to table below it can be say that European
Union countries in 2005 made investment more than USA and rest of
the world in Romania in total amount of investment.
Romania and FDI
 In 2002, Foreign Investment Agency of Romania
established which provides investment incentives for
foreign investors in institutional level.
Romania and FDI
 In 2002, Foreign Investment Agency of Romania
established which provides investment incentives for
foreign investors in institutional level.
 Moreover, before became a member state of European
Union, Romania had funds from EU such as;
Romania and FDI
 In 2002, Foreign Investment Agency of Romania
established which provides investment incentives for
foreign investors in institutional level.
 Moreover, before became a member state of European
Union, Romania had funds from EU such as;
-Phare
Romania and FDI
 In 2002, Foreign Investment Agency of Romania
established which provides investment incentives for
foreign investors in institutional level.
 Moreover, before became a member state of European
Union, Romania had funds from EU such as;
-Phare
-Sapard
Romania and FDI
 In 2002, Foreign Investment Agency of Romania
established which provides investment incentives for
foreign investors in institutional level.
 Moreover, before became a member state of European
Union, Romania had funds from EU such as;
-Phare
-Sapard
-Ispa
Romania and FDI
 However, after became a member of European Union,
Romania gets 6,6 billion Euro for accordance, 12,7 billion
Euro from European Regional Development Funds and
7,1 billion Euro from European agricultural funds.
Romania and FDI
 According to graph below, it can be say that after being a member
of EU, Romania reached FDI flows in top level in 2008
Bulgaria and FDI
 Like Poland and Romania, Bulgaria governed by
communist regime, therefore after collapse of USSR,
Bulgaria had difficult problems in 1990’s. Such as;
Bulgaria and FDI
 Like Poland and Romania, Bulgaria governed by
communist regime, therefore after collapse of USSR,
Bulgaria had difficult problems in 1990’s. Such as;
-In real sector
Bulgaria and FDI
 Like Poland and Romania, Bulgaria governed by
communist regime, therefore after collapse of USSR,
Bulgaria had difficult problems in 1990’s. Such as;
-In real sector
-In banking sector
Bulgaria and FDI
 Like Poland and Romania, Bulgaria governed by
communist regime, therefore after collapse of USSR,
Bulgaria had difficult problems in 1990’s. Such as;
-In real sector
-In banking sector
-In financing sector
Bulgaria and FDI
 Like Poland and Romania, Bulgaria governed by
communist regime, therefore after collapse of USSR,
Bulgaria had difficult problems in 1990’s. Such as;
-In real sector
-In banking sector
-In financing sector
 To solve those problem Bulgarian Central Bank print
money which brought inflation to highest level.
Bulgaria and FDI
 Therefore, interest rates and budget deficit increase after
the banking system collapsed.
Bulgaria and FDI
 Therefore, interest rates and budget deficit increase after
the banking system collapsed.
 To solve this problem in the economy, in 1997 Bulgaria
started to negotiate with IMF.
Bulgaria and FDI
 Therefore, interest rates and budget deficit increase after
the banking system collapsed.
 To solve this problem in the economy, in 1997 Bulgaria
started to negotiate with IMF.
 According to IMF suggestion Bulgaria established
monetary institution and firstly, fixed its own currency to
German currency and then fixed its own currency to Euro
in 1999.
Bulgaria and FDI
 After all these, Bulgaria made price liberalization and
reforms in social sector. Also, Bulgaria made
reconsturction in agriculture and energy sector.
Bulgaria and FDI
 After all these, Bulgaria made price liberalization and
reforms in social sector. Also, Bulgaria made
reconsturction in agriculture and energy sector.
 By those reforms and IMF cooperations brought stability
to the Bulgarian economy.
Bulgaria and FDI
 After all these, Bulgaria made price liberalization and
reforms in social sector. Also, Bulgaria made
reconsturction in agriculture and energy sector.
 By those reforms and IMF cooperations brought stability
to the Bulgarian economy.
 In 1996 by being a member of WTO broughts an
advantage for developping economy as a result of that, in
1998, inflation rate declined from 578,5% to 5,2% by
adopting WTO’s suggestions.
Bulgaria and FDI
 After all these, Bulgaria made price liberalization and
reforms in social sector. Also, Bulgaria made
reconsturction in agriculture and energy sector.
 By those reforms and IMF cooperations brought stability
to the Bulgarian economy.
 In 1996 by being a member of WTO broughts an
advantage for developping economy as a result of that, in
1998, inflation rate declined from 578,5% to 5,2% by
adopting WTO’s suggestions.
 In 2004 Bulgaria became a member of NATO and in 2007
became a member of European Union.
Bulgaria and FDI
 According to table below it can be say that, like Poland and
Romania, Bulgarian FDI flows started to rise in 2004 but reached
highest level in 2007.
Bulgaria and FDI
 According to table below; it can be say that most of the FDI
flows came in to Bulgaria from Austria, Greece and Italy between
2000 and 2005.
Turkey and FDI
 By starting 1980 liberalization movement increased in
Turkey. However, in 1990s, economic and politic
unstabilization brought many problems.
Turkey and FDI
 By starting 1980 liberalization movement increased in
Turkey. However, in 1990s, economic and politic
unstabilization brought many problems.
 Coalition or minority governmets brougth crises in 1994
and 2001.
Turkey and FDI
 By starting 1980 liberalization movement increased in
Turkey. However, in 1990s, economic and politic
unstabilization brought many problems.
 Coalition or minority governmets brougth crises in 1994
and 2001.
 It can be say that in that crises period FDI flows broke
down.
Turkey and FDI
 By starting 1980 liberalization movement increased in
Turkey. However, in 1990s, economic and politic
unstabilization brought many problems.
 Coalition or minority governmets brougth crises in 1994
and 2001.
 It can be say that in that crises period FDI flows broke
down.
 After 2001 with the implementation of IMF policies in
2002 Turkish economy growth 7,9%.
Turkey and FDI
 On the other hands it can be say that, with the Law of
foreign investment law wihch established in 1954 only
brought 240 million $ until 1980. However by the new
order of FDI law, FDI flow reached 15 billion $ between
1980 and 2000.
Turkey and FDI
 In 2003, FDI law reshaped again. According to new FDI
law wihch established in 2003;
 The objective of this Law is to regulate the principles to
encourage foreign direct investments; to protect the rights
of foreign investors; to define investment and investor in
line with international standards; to establish a
notification-based system for foreign direct investments
rather than screening and approval; and to increase
foreign direct investments through established policies.
This Law establishes the treatment to be applied to
foreign direct investments.
Turkey and FDI
 It can be say that by this law, investors and their
investment under protection. Therefore, main purpose of
this law, try to make safety for investors and try to
increase their investment.
 However; In 2003 Turkey’s biggest problems was
unemployment which was about 10.5% but it gradually
decreased to 6.3% in 2007.
 The export level has grown from 27,775 million $ to
85,479 million $ in between 2003-2009 and import levels
also increased from 54,503 million $ to 138,290 million $
Turkey and FDI
 Turkey’s trade with European countries increased year by
year because of being member of Customs Union. Turkey
is in a transition process for EU. For this reason, it should
make its economy better in all aspects. By being a
member in the future, there will be a lot of changes in FDI
and other trade issues. Because of removing exchange
rates among the EU members, Turkey’s attraction for
other members increased and these provide big amount of
investment in Turkey and also abroad from Turkey.
Turkey and FDI
 According to graph below, it can be say that FDI flows in
Turkey increased between 2005-2007 however after 2007
it declined.
Turkey and FDI
 According to graph below, it can be say that FDI flows in
Turkey came from European Countries more than others
in 2006.
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
-Excgange rates
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
-Excgange rates
-Inflation rates
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
-Excgange rates
-Inflation rates
-Interest rates
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
-Excgange rates
-Inflation rates
-Interest rates
-Economic stabilization
Conclusion
 According to all those information, it can be say that, FDI
related with investors decisions. However; in decision
making process calculation of;
-Excgange rates
-Inflation rates
-Interest rates
-Economic stabilization
-Political process are important factors.
Conclusion
 Therefore; it can be say that being a member state of
European Union brings an advantage for economy
because of four freedoms provides investments more
trustable and most efficient.
Conclusion
 Therefore; it can be say that being a member state of
European Union brings an advantage for economy
because of four freedoms provides investments more
trustable and most efficient.
 On the other hand being a member state of the EU,
provides other members to make an investment in a new
member after EU policies applied, because new member’s
sectors needs to developed and this needs brings benefits
for the most investors.
Conclusion
 However, in accession process Turkey has already
approximately 80% of FDI flows from European Union.
That means, economical conditions and geopolitical
position of Turkey most important than other countries for
EU.
Conclusion
 However, in accession process Turkey has already
approximately 80% of FDI flows from European Union.
That means, economical conditions and geopolitical
position of Turkey most important than other countries for
EU.
 Therefore, it can be say that not only being a member of
the EU effects FDI flows, but also political conditions
effects FDI flows too.
Conclusion
 Lastly, the graph below shows that differences and similarities of FDI
flows between Poland, Romania, Bulgaria and Turkey.