ONE LESS BARRIER TO FOREIGN DIRECT INVESTMENT IN TURKEY? LINKAGES BETWEEN MANUFACTURING AND LOGISTICS OPERATIONS IN ISTANBUL AND THE MARMARA REGION

Abstract

Despite various reasons for the relatively low levels of foreign direct investment (FDI) inflow into Turkey throughout the postwar period, Istanbul has proved relatively successful in attracting inward FDI in services in recent years. Increased production by both foreign and domestic manufacturers in the wider Marmara region has also resulted in a concentration of service sector firms in the greater Istanbul metropolitan area. Examination of the profile of foreign investors and investment categories reveals that Germany and the Netherlands remain major sources of investment, and that investment from these two countries shows the most marked signs of functional linkage between manufacturing and service projects. This growth of functional linkage, exemplified by the increased importance of logistics operations, may represent the removal of one more factor inhibiting inward investment into Turkey on a scale appropriate to its size and growth potential.