Foreign Direct Investment in European Union Members Poland, Romania, Bulgaria and Non-EU member Turkey

1
Foreign Direct Investment in European Union
Members Poland, Romania, Bulgaria and Non-EU
member Turkey Okan Büyükbay Oguzhan Sahin
2
Introduction

• By starting 1980s importance of foreign direct
  investment has been rise in European economy and
  also rest of the world.

3
Introduction

• By starting 1980s 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.

4
Introduction

• By removing tariffs, quotas and barriers, capital
  movement increased between member states.

5
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.

6
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.

7
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 Turkeys FDI flows during the
  accession period because those countries economic
  structures approximately same with Turkey.

8
Poland and FDI

• After the WW2 approximately 45 years Poland
  isolated itself because of communist tradition.

9
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 1980s.

10
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 1980s.
• 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.

11
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.

12
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
  1980s and in 1989 elections communism removed in
  Poland.

13
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
  1980s 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.

14
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.

15
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.

16
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.

17
Poland and FDI
18
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.

19
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

20
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

21
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

22
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

23
Poland and FDI

• So far, it can be say that those factors birngs
  economical development and it provides more
  investment from investors.

24
Poland and FDI

According to graph above, it can be say that FDI
inwards, increase by starting 2004 and reached
highest level.
25
Romania and FDI

• Like every other former Soviet Union country,
  Romania was also governed by central planned
  economy.

26
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

27
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

28
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

29
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.

30
Romania and FDI

• After the collapse of communist regime in
  Romania, by starting in 1989 step by step
  Romanias economy shifted to free market economy.

31
Romania and FDI

• After the collapse of communist regime in
  Romania, by starting in 1989 step by step
  Romanias economy shifted to free market economy.
  
• However, there was a stagnation period between
  1990-2000 in Romania because of deficent reforms
  both in politics and economics.

32
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.

33
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.

34
Romania and FDI

• In 2002, Foreign Investment Agency of Romania
  established which provides investment incentives
  for foreign investors in institutional level.

35
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

36
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

37
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

38
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

39
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.

40
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

41
Bulgaria and FDI

• Like Poland and Romania, Bulgaria governed by
  communist regime, therefore after collapse of
  USSR, Bulgaria had difficult problems in 1990s.
  Such as

42
Bulgaria and FDI

• Like Poland and Romania, Bulgaria governed by
  communist regime, therefore after collapse of
  USSR, Bulgaria had difficult problems in 1990s.
  Such as
• -In real sector

43
Bulgaria and FDI

• Like Poland and Romania, Bulgaria governed by
  communist regime, therefore after collapse of
  USSR, Bulgaria had difficult problems in 1990s.
  Such as
• -In real sector
• -In banking sector

44
Bulgaria and FDI

• Like Poland and Romania, Bulgaria governed by
  communist regime, therefore after collapse of
  USSR, Bulgaria had difficult problems in 1990s.
  Such as
• -In real sector
• -In banking sector
• -In financing sector

45
Bulgaria and FDI

• Like Poland and Romania, Bulgaria governed by
  communist regime, therefore after collapse of
  USSR, Bulgaria had difficult problems in 1990s.
  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.

46
Bulgaria and FDI

• Therefore, interest rates and budget deficit
  increase after the banking system collapsed.

47
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.

48
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.

49
Bulgaria and FDI

• After all these, Bulgaria made price
  liberalization and reforms in social sector.
  Also, Bulgaria made reconsturction in agriculture
  and energy sector.

50
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.

51
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 WTOs suggestions.

52
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 WTOs suggestions.
• In 2004 Bulgaria became a member of NATO and in
  2007 became a member of European Union.

53
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.

54
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.

55
Turkey and FDI

• By starting 1980 liberalization movement
  increased in Turkey. However, in 1990s, economic
  and politic unstabilization brought many
  problems.

56
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.

57
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.

58
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.

59
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.

60
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.

61
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 Turkeys 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

62
Turkey and FDI

• Turkeys 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, Turkeys attraction
  for other members increased and these provide big
  amount of investment in Turkey and also abroad
  from Turkey.

63
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.

64
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.

65
Conclusion

• According to all those information, it can be say
  that, FDI related with investors decisions.
  However in decision making process calculation
  of

66
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

67
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

68
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

69
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

70
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.

71
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.

72
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
  members sectors needs to developed and this
  needs brings benefits for the most investors.

73
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.

74
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.

75
Conclusion

• Lastly, the graph below shows that differences
  and similarities of FDI flows between Poland,
  Romania, Bulgaria and Turkey.

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