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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 Europe a n economy and also rest of the world. Introduction.

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slide1

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

introduction
Introduction

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

introduction1
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.

introduction2
Introduction

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

introduction3
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.

introduction4
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.

introduction5
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
Poland and FDI

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

poland and fdi1
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 fdi2
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 fdi3
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 fdi4
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 electionscommunism removed in Poland.

poland and fdi5
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 fdi6
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 meansthat growth rate declining step by step.

poland and fdi7
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 fdi8
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 fdi10
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 fdi11
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 fdi12
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.

Inadditiontothis, PolandderivedbenefitfromEuropeanUnionstructuralfundssuch as;

-EuropeanSocialFunds

poland and fdi13
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 fdi14
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 fdi15
Poland and FDI

So far, it can be say thatthosefactorsbirngseconomicaldevelopmentand it providesmoreinvestmentfrominvestors.

poland and fdi16
Poland and FDI

Accordingtographabove, it can be say that FDI inwards, increasebystarting 2004 andreachedhighestlevel.

romania and fdi
Romania and FDI

LikeeveryotherformerSovietUnioncountry, Romaniawasalsogovernedbycentralplannedeconomy.

romania and fdi1
Romania and FDI

LikeeveryotherformerSovietUnioncountry, Romaniawasalsogovernedbycentralplannedeconomy.

Therefore, closedeconomycausedfinancialproblemssuch as;

romania and fdi2
Romania and FDI

LikeeveryotherformerSovietUnioncountry, Romaniawasalsogovernedbycentralplannedeconomy.

Therefore, closedeconomycausedfinancialproblemssuch as;

-Highdeficit

romania and fdi3
Romania and FDI

LikeeveryotherformerSovietUnioncountry, Romaniawasalsogovernedbycentralplannedeconomy.

Therefore, closedeconomycausedfinancialproblemssuch as;

-Highdeficit

-Decreasing of moneysupply

romania and fdi4
Romania and FDI

LikeeveryotherformerSovietUnioncountry, Romaniawasalsogovernedbycentralplannedeconomy.

Therefore, closedeconomycausedfinancialproblemssuch as;

-Highdeficit

-Decreasing of moneysupply

SothesebroughtunstableeconomicalconditionstoRomania.

romania and fdi5
Romania and FDI

After the collapse of communist regime in Romania, bystarting in 1989 step by step Romania’seconomyshiftedtofree market economy.

romania and fdi6
Romania and FDI

After the collapse of communist regime in Romania, bystarting in 1989 step by step Romania’seconomyshiftedtofree market economy.

However, therewas a stagnationperiodbetween 1990-2000 in Romaniabecause of deficentreformsboth in politicsandeconomics.

romania and fdi7
Romania and FDI

Accordingtotablebelow, it can be say thatafter 2002 FDI flowsincreasesandreachedhighestlevel in 2006 approximately 9 billion Euro.

romania and fdi8
Romania and FDI

Inadditiontothis, accordingtotablebelow it can be say thatEuropeanUnioncountries in 2005 madeinvestmentmorethan USA and rest of theworld in Romania in total amount of investment.

romania and fdi9
Romania and FDI

In 2002, ForeignInvestmentAgency of Romaniaestablishedwhichprovidesinvestmentincentivesforforeigninvestors in institutionallevel.

romania and fdi10
Romania and FDI

In 2002, ForeignInvestmentAgency of Romaniaestablishedwhichprovidesinvestmentincentivesforforeigninvestors in institutionallevel.

Moreover, beforebecame a memberstate of EuropeanUnion, Romania had fundsfrom EU such as;

romania and fdi11
Romania and FDI

In 2002, ForeignInvestmentAgency of Romaniaestablishedwhichprovidesinvestmentincentivesforforeigninvestors in institutionallevel.

Moreover, beforebecame a memberstate of EuropeanUnion, Romania had fundsfrom EU such as;

-Phare

romania and fdi12
Romania and FDI

In 2002, ForeignInvestmentAgency of Romaniaestablishedwhichprovidesinvestmentincentivesforforeigninvestors in institutionallevel.

Moreover, beforebecame a memberstate of EuropeanUnion, Romania had fundsfrom EU such as;

-Phare

-Sapard

romania and fdi13
Romania and FDI

In 2002, ForeignInvestmentAgency of Romaniaestablishedwhichprovidesinvestmentincentivesforforeigninvestors in institutionallevel.

Moreover, beforebecame a memberstate of EuropeanUnion, Romania had fundsfrom EU such as;

-Phare

-Sapard

-Ispa

romania and fdi14
Romania and FDI

However, afterbecame a member of EuropeanUnion, Romaniagets 6,6 billion Euro foraccordance, 12,7 billion Euro fromEuropeanRegionalDevelopmentFundsand 7,1 billion Euro fromEuropeanagriculturalfunds.

romania and fdi15
Romania and FDI

Accordingtographbelow, it can be say thatafterbeing a member of EU, Romaniareached FDI flows in top level in 2008

bulgaria and fdi
Bulgariaand FDI

LikePolandandRomania, Bulgariagovernedbycommunistregime, thereforeaftercollapse of USSR, Bulgaria had difficultproblems in 1990’s. Such as;

bulgaria and fdi1
Bulgariaand FDI

LikePolandandRomania, Bulgariagovernedbycommunistregime, thereforeaftercollapse of USSR, Bulgaria had difficultproblems in 1990’s. Such as;

-Inrealsector

bulgaria and fdi2
Bulgariaand FDI

LikePolandandRomania, Bulgariagovernedbycommunistregime, thereforeaftercollapse of USSR, Bulgaria had difficultproblems in 1990’s. Such as;

-Inrealsector

-Inbankingsector

bulgaria and fdi3
Bulgariaand FDI

LikePolandandRomania, Bulgariagovernedbycommunistregime, thereforeaftercollapse of USSR, Bulgaria had difficultproblems in 1990’s. Such as;

-Inrealsector

-Inbankingsector

-Infinancingsector

bulgaria and fdi4
Bulgariaand 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 fdi5
Bulgariaand FDI

Therefore, interestratesandbudgetdeficitincreaseafterthebankingsystemcollapsed.

bulgaria and fdi6
Bulgariaand FDI

Therefore, interestratesandbudgetdeficitincreaseafterthebankingsystemcollapsed.

Tosolvethis problem in theeconomy, in 1997 Bulgariastartedtonegotiatewith IMF.

bulgaria and fdi7
Bulgariaand FDI

Therefore, interestratesandbudgetdeficitincreaseafterthebankingsystemcollapsed.

Tosolvethis problem in theeconomy, in 1997 Bulgariastartedtonegotiatewith IMF.

Accordingto IMF suggestionBulgariaestablishedmonetaryinstitutionandfirstly, fixeditsowncurrencytoGermancurrencyandthenfixeditsowncurrencyto Euro in 1999.

bulgaria and fdi8
Bulgariaand FDI

Afterallthese, Bulgariamadepriceliberalizationandreforms in socialsector. Also, Bulgariamadereconsturction in agricultureandenergysector.

bulgaria and fdi9
Bulgariaand FDI

Afterallthese, Bulgariamadepriceliberalizationandreforms in socialsector. Also, Bulgariamadereconsturction in agricultureandenergysector.

Bythosereformsand IMF cooperationsbroughtstabilitytotheBulgarianeconomy.

bulgaria and fdi10
Bulgariaand FDI

Afterallthese, Bulgariamadepriceliberalizationandreforms in socialsector. Also, Bulgariamadereconsturction in agricultureandenergysector.

Bythosereformsand IMF cooperationsbroughtstabilitytotheBulgarianeconomy.

In 1996 bybeing a member of WTO broughts an advantagefordeveloppingeconomy as a result of that, in 1998, inflation rate declinedfrom 578,5% to 5,2% byadoptingWTO’ssuggestions.

bulgaria and fdi11
Bulgariaand FDI

Afterallthese, Bulgariamadepriceliberalizationandreforms in socialsector. Also, Bulgariamadereconsturction in agricultureandenergysector.

Bythosereformsand IMF cooperationsbroughtstabilitytotheBulgarianeconomy.

In 1996 bybeing a member of WTO broughts an advantagefordeveloppingeconomy as a result of that, in 1998, inflation rate declinedfrom 578,5% to 5,2% byadoptingWTO’ssuggestions.

In 2004 Bulgariabecame a member of NATO and in 2007 became a member of EuropeanUnion.

bulgaria and fdi12
Bulgariaand FDI

Accordingtotablebelow it can be say that, likePolandandRomania, Bulgarian FDI flowsstartedtorise in 2004 but reachedhighestlevel in 2007.

bulgaria and fdi13
Bulgariaand FDI

Accordingtotablebelow; it can be say thatmost of the FDI flowscame in toBulgariafromAustria, GreeceandItalybetween 2000 and 2005.

turkey and fdi
Turkeyand FDI

Bystarting 1980 liberalizationmovementincreased in Turkey. However, in 1990s, economicandpoliticunstabilizationbroughtmanyproblems.

turkey and fdi1
Turkeyand FDI

Bystarting 1980 liberalizationmovementincreased in Turkey. However, in 1990s, economicandpoliticunstabilizationbroughtmanyproblems.

Coalitionorminoritygovernmetsbrougthcrises in 1994 and 2001.

turkey and fdi2
Turkeyand FDI

Bystarting 1980 liberalizationmovementincreased in Turkey. However, in 1990s, economicandpoliticunstabilizationbroughtmanyproblems.

Coalitionorminoritygovernmetsbrougthcrises in 1994 and 2001.

It can be say that in thatcrisesperiod FDI flowsbrokedown.

turkey and fdi3
Turkeyand FDI

Bystarting 1980 liberalizationmovementincreased in Turkey. However, in 1990s, economicandpoliticunstabilizationbroughtmanyproblems.

Coalitionorminoritygovernmetsbrougthcrises in 1994 and 2001.

It can be say that in thatcrisesperiod FDI flowsbrokedown.

After 2001 withtheimplementation of IMF policies in 2002 Turkisheconomygrowth 7,9%.

turkey and fdi4
Turkeyand FDI

On theotherhands it can be say that, withtheLaw of foreigninvestmentlawwihchestablished in 1954 onlybrought 240 million $ until 1980. Howeverbytheneworder of FDI law, FDI flowreached 15 billion $ between 1980 and 2000.

turkey and fdi5
Turkeyand FDI

In 2003, FDI lawreshapedagain. Accordingtonew FDI lawwihchestablished in 2003;

The objective of this Law is to regulate the principles to

encourage foreign direct investments; to protect the rights offoreign investors; to define investment and investor in line with international standards; to establish anotification-based system for foreign direct investments rather than screening and approval; and to increaseforeign direct investments through established policies. This Law establishes the treatment to be applied to foreign direct investments.

turkey and fdi6
Turkeyand FDI

It can be say thatbythislaw, investorsandtheirinvestmentunderprotection. Therefore, mainpurpose of thislaw, trytomakesafetyforinvestorsandtrytoincreasetheirinvestment.

However; In 2003 Turkey’s biggest problemswas 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 $ inbetween 2003-2009 and import levels also increased from 54,503 million $ to 138,290 million $

turkey and fdi7
Turkeyand FDI

Turkey’s trade with European countries increased year by year because of being member ofCustoms Union. Turkey is in a transition process for EU. For this reason, it should make itseconomy better in all aspects. By being a member in the future, there will be a lot of changesin 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 investmentin Turkey and also abroad from Turkey.

turkey and fdi8
Turkeyand FDI

Accordingtographbelow, it can be say that FDI flows in Turkeyincreasedbetween 2005-2007 howeverafter 2007 it declined.

turkey and fdi9
Turkeyand FDI

Accordingtographbelow, it can be say that FDI flows in TurkeycamefromEuropeanCountriesmorethanothers in 2006.

conclusion
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

conclusion1
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

-Excgangerates

conclusion2
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

-Excgangerates

-Inflationrates

conclusion3
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

-Excgangerates

-Inflationrates

-Interestrates

conclusion4
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

-Excgangerates

-Inflationrates

-Interestrates

-Economicstabilization

conclusion5
Conclusion

Accordingtoallthoseinformation, it can be say that, FDI relatedwithinvestorsdecisions. However; in decisionmakingprocesscalculation of;

-Excgangerates

-Inflationrates

-Interestrates

-Economicstabilization

-Politicalprocessareimportantfactors.

conclusion6
Conclusion

Therefore; it can be say thatbeing a memberstate of EuropeanUnionbrings an advantageforeconomybecause of fourfreedomsprovidesinvestmentsmoretrustableandmostefficient.

conclusion7
Conclusion

Therefore; it can be say thatbeing a memberstate of EuropeanUnionbrings an advantageforeconomybecause of fourfreedomsprovidesinvestmentsmoretrustableandmostefficient.

On theotherhandbeing a memberstate of the EU, providesothermemberstomake an investment in a newmemberafter EU policiesapplied, becausenewmember’ssectorsneedstodevelopedandthisneedsbringsbenefitsforthemostinvestors.

conclusion8
Conclusion

However, in accessionprocessTurkey has alreadyapproximately 80% of FDI flowsfromEuropeanUnion. Thatmeans, economicalconditionsandgeopoliticalposition of Turkeymostimportantthanothercountriesfor EU.

conclusion9
Conclusion

However, in accessionprocessTurkey has alreadyapproximately 80% of FDI flowsfromEuropeanUnion. Thatmeans, economicalconditionsandgeopoliticalposition of Turkeymostimportantthanothercountriesfor EU.

Therefore, it can be say that not onlybeing a member of the EU effects FDI flows, but alsopoliticalconditionseffects FDI flowstoo.

conclusion10
Conclusion

Lastly, thegraphbelowshowsthatdifferencesandsimilarities of FDI flowsbetweenPoland, Romania, BulgariaandTurkey.

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