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I am citing an article here: In a speech at the G-20 in Istanbul, TİM’s Mehmet Büyükekşi said, “Protectionism is increasing in every market around the world and it is affecting not only Turkish exports, but also Foreign Direct Investment [FDI] in Turkey.

I really can't see a link between protectionism in another country and FDI in Turkey. What is the link here? Also, he later says that devaluation of euro against the dollar affected total FDI value. That makes a little more sense to me, because it can be that amount in euros prepared for some investment in Turkey suddenly became less valuable. I hope that is correct, but I don't get the protectionism part?

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A protectionist policy in other countries could take the form of providing more incentives for companies to invest domestically instead of abroad. For example, U.S. companies face penalties if they invest abroad compared to investing in the U.S. or they have more benefits from investing in the U.S. now compared to before. Anyhow, companies outside of Turkey could have more inventives to invest in their own countries, which in turn means they have less incentives to invest abroad, which in turn means they have less incentives to invest in Turkey, which in turn means they invest less in Turkey.

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  • $\begingroup$ Thank you for the answer. That was also my assumption but my teacher told me that it is unclear. I am actually an IB student discussing an article for internal assessment. I will stick to this because it really makes sense, I will just explain it better $\endgroup$
    – Ibrahim Filandra
    Dec 27, 2015 at 20:17
  • $\begingroup$ Well I agree with your professor that it is unclear whether this is actually taking place. That is a question for the data. It may not be taking place jsut as well. However, if it is then that is the way it would. Unfortunately, that is all theory can say sometimes :). $\endgroup$
    – BB King
    Dec 27, 2015 at 20:37

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