Intrametropolitan Determinants of Foreign Investment Firms in Istanbul

Abstract

In the process of economic transformation there has been considerable academic interest in the understanding of the location behavior of foreign direct investment (FDI) firms. While studies on FDI firm location have mainly focused on the national and regional levels, studies of the intraurban level have been limited, especially so for developing countries. In developing countries, intensive studies have been carried out on the spatial impacts of foreign capital on the national city system or the regional determinants in the location choice of foreign capital. However, studies on the impacts of foreign investments on the cities of the developing countries have been limited. The same situation also holds true for the studies conducted in Turkey and studies on the spatial models at the intraurban level are limited. Foreign investment requires that the market conditions of the area in which it is considering investing be commensurate with no-risk business operations and demands that the conditions relative to the spatial quality of the area (e.g., quality infrastructure, easy access, transportation-communication systems, and the quality of the building and environment) be of such standards that they accord with, and reflect, the power and prestige of the firm. For this reason, it is important that we understand the characteristics and spatial distribution of the FDI firms in Turkey. FDIs in Turkey have primarily concentrated in the country’s biggest city, Istanbul, Turkey, which to date has attracted the highest level of foreign investment in Turkey. In this study, the locational determinants of foreign investment firms in Istanbul, Turkey have been analyzed by using the linear regression analysis and logistic regression model.