JOURNAL OF MEHMET AKIF ERSOY UNIVERSITY ECONOMICS AND ADMINISTRATIVE SCIENCES FACULTY, vol.8, no.3, pp.1456-1475, 2021 (ESCI)
The acceleration of capital transfers between countries after globalization has increased the importance of foreign direct investment in developing countries. The lack of capital in developing countries, such as Turkey, is an obstacle to investment. In this context, foreign direct investment that will come to the country is important in terms of eliminating the negativities caused by the lack of capital. Foreign direct investment is influenced by many factors. One of them is the geopolitical risk of the country. This study aims to investigate the effect of geopolitical risk on foreign direct investment in Turkey using ARDL Bound Test and Granger Causality Analysis for the period 1998-2018. In addition to geopolitical risk, real exchange rate, labor force, real GDP and savings affecting FDI were also included in the study. The results of the analysis show that geopolitical risk and labor force have a negative effect on FDI while real GDP, real exchange rate and savings have a positive effect on FDI. On the other hand, according to the results of Granger causality test, there is a one-way causality relationship from geopolitical risk to FDI.