FDI STRATEGY
Insights & Key Findings
A Comprehensive Overview of the Insights and Key Findings that Shaped Türkiye’s FDI Strategy
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INSIGHTS & FINDINGS
Global FDI Outlook and Key Trends
FDI STRATEGY
Global FDI Inflows
Global FDI inflows, excluding peaks triggered by large-scale mergers and acquisitions (M&A) in 2015 and 2016, have plateaued out since the 2008 Global Financial Crisis.
Shifting Dynamics in Global FDI: Post-Crisis Plateau, Pandemic Impact, and Rise of Developing Countries
Global FDI inflows have remained stagnant since the 2008 financial crisis, with notable fluctuations in recent years. The COVID-19 pandemic caused a sharp decline in 2020, followed by a surge in 2021 driven by M&A transactions. However, this rebound was short-lived, as rising inflation and geopolitical tensions have recently contributed to a renewed downward trend. The pandemic also reshaped global supply chains, spurring increased investments in green and digital sectors. On the other hand, since 2018, developing countries have consistently outpaced developed nations in attracting FDI, a trend that has continued since 2020.
Share of Developed and Developing Countries in Global FDI Inflows (%)
Global FDI Inflows, M&A and Greenfield Investments*(Trillion USD)
FDI STRATEGY
FDI Inflows in the Region
The CEEMENA region, encompassing Central and Eastern Europe, the Middle East, and North Africa, has witnessed a notable recovery in FDI inflows since 2015, following a prolonged decline after the Global Financial Crisis. Total FDI to the region more than doubled from $72 billion in 2015 to $178,3 billion in 2023, despite global FDI contraction. Within this dynamic context, Türkiye stands out as a key destination for international investors, leveraging its strategic location at the crossroads of the region and attracting significant interest across diverse sectors. Investors frequently shortlist Türkiye when exploring new opportunities in region.
Strategic Location
Türkiye’s unique location
Top Destination
Frequently shortlisted country
CEEMENA's Increasing Investment Appeal
Regional resilience amid global FDI decline
FDI Surge
Doubling inflows from 2015 to 2022
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The Region's Share in Global FDI Inflows (%)
Following the Global Financial Crisis, the region experienced a decline in its portion of global FDI inflows, continuing until 2015. However, since then, FDI inflows to the region have gained momentum in the face of contraction in global FDI. With this acceleration, the total FDI to the region between 2015 and 2023 more than doubled, reaching 178.3 billion USD in 2023 which was 67.4 billion USD in 2015.
Türkiye stands as one of the most significant FDI destinations in the CEEMENA region.
Looking at the country-level breakdown, Türkiye has drawn in 261 billion USD of FDI over the last two decades (2004-2023), securing the second position with 9.8% market share in the CEEMENA region.
FDI STRATEGY
Türkiye: Leading Investment Destination in Food, Agriculture, and Industrial Sectors in CEEMENA
Türkiye has become the region’s most attractive investment destination in the food and agriculture and industrial sectors.
FDI STRATEGY
8 Key Trends in Global FDI
The global FDI landscape is undergoing significant transformation, with investors’ decisions increasingly influenced by eight major trends. A thorough understanding of these trends is crucial for all stakeholders to effectively design and implement Türkiye’s national FDI strategy.
FDI TRENDS
Global Value Chains (GVCs) Are Being Reshaped
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change and natural disasters, pandemics, and the increasing importance of sustainability and digitalization concepts are leading to a reconfiguration of global value chains.
FDI TRENDS
Deglobalization and Protectionism Trends Are Strengthening
Deglobalization and Protectionism Trends Are Strengthening
Recent tensions among the economic blocs have led countries to adopt more protectionist and inward-looking policies in investment and trade, driven by national security concerns.
FDI TRENDS
Global Economic Uncertainties Are Surging
Global Economic Uncertainties Are Surging
Geopolitical tensions, climate change and natural disasters, pandemics, and the increasing importance of sustainability and digitalization concepts are leading to a reconfiguration of global value chains.
FDI TRENDS
Economic and Political Fragmentation on a Global Scale Is Deepening
Economic and Political Fragmentation on a Global Scale Is Deepening
Recent global economic and political fragmentations have led to protectionist measures, significantly impacting the global economy. Reports from the IMF, World Bank, UNCTAD, and OECD highlight how these trends are affecting FDI and financial investment flows worldwide.
FDI TRENDS
Climate Change and Environmental Sustainability Play a Transformative Role in FDI
Climate Change and Environmental Sustainability Play a Transformative Role in FDI
In recent years, climate change mitigation and adaptation strategies have become one of the most critical agenda items for the private sector and policymakers. Driven by global and regional climate policies such as the Paris Climate Agreement and the EU Green Deal, the importance of environmental sustainability is steadily increasing, and deeply affecting FDI trends.
FDI TRENDS
Digital Transformation Is Accelerating
Digital Transformation Is Accelerating
The acceleration of the digitalization process on a global level is transforming traditional sectors and facilitating the growth of new ones.
FDI TRENDS
Regional and National Industrial Policies Are Gaining Greater Importance
Regional and National Industrial Policies Are Gaining Greater Importance
Industrial policies have been gaining momentum in many countries that started with the 2008 Global Financial Crisis and accelerated with the increasing geopolitical tensions worldwide. Many major economies are designing comprehensive incentive packages for strategic sectors under these new industrial policies.
FDI TRENDS
New Technologies and High-Quality Service Inputs Are Transforming the Manufacturing Industry
New Technologies and High-Quality Service Inputs Are Transforming the Manufacturing Industry
The widespread adoption of technologies such as AI-enhanced automation systems, robotics, and 3D printing is rapidly revolutionizing the manufacturing industry. This shift in production methodologies has diminished the significance of labor costs in the competition to attract investments, especially in labor-intensive sectors.
INSIGHTS & FINDINGS
Türkiye's FDI Performance
Over the past 20 years, Türkiye has emerged as an attractive FDI destination thanks to various factors, including continuous and strong reform agenda, economic and political stability, a young and dynamic population, and a strategic location it offers.
New Legal Regulations and Continuous Reform Process
Foreign Direct Investment (FDI) Law
Comprehensive Incentive Schemes
Strong Agenda for Sustainability and Green Transformation
Establishment of the Coordination Council for the Improvement of the Investment Environment (YOIKK)
Establishment of the Investment Office of Türkiye Reforms in Fundamental Laws
Judicial Reforms to Improve the Investment Environment
Strong Engagement with Ease of Doing Business / Business Ready (B-READY) Indices
Key Factors Lying Behind Türkiye’s Outstanding FDI Performance
- Continuous Economic and Political Stability
- Resilience Against Global Shocks
- Young and Dynamic Population
- Highly Skilled Talent Pool
- Robust Infrastructure
- Digital Transformation
- Vibrant R&D Ecosystem
- Geostrategic Location
- Customs Union with European Union (EU)
- A Wide Range of Free Trade Agreements
- Strong Integration into Global Value Chains (GVCs)
- Robust Economic Growth
- Production and Export Hub of the Region
Total FDI Inflows
15 Billion
1973-2002
262 Billion
2003-2023
Türkiye's Share in the Global FDI
0.2%
1990-2002
0.9%
2003-2023
Number of International Companies Operating in Türkiye
5,600
2003
82,700
2023
The Average Contribution of FDI to the Current Account Balance
40%
2003-2023
FDI STRATEGY
Türkiye's Startup Ecosystem
Turkish startup ecosystem has all key stakeholders in place and offers a vivid environment to international investors.
BUSINESS ANGEL NETWORKS
VENTURE CAPITAL FUNDS
PRIVATE EQUITY FUNDS
TECHNOLOGY ZONES (TECHNOPARKS)
INCUBATION CENTERS
CROWDFUNDING
SEED FUNDING
ACCELERATORS
GOVERNMENT SUPPORTS
Türkiye’s Startup Ecosystem Reaches New Heights in Early-Stage Investments
Between 2010 and 2020, Türkiye’s startup ecosystem attracted $74 million annually through 104 transactions on average. From 2021 to 2023, investments soared to $1.33 billion annually, with an average of 338 transactions.
5
The Number of Unicorns
2020-2023
2
The Number of Decacorns
2020-2023
FDI STRATEGY
The Contribution of FDI to the Turkish Economy
FDI in Türkiye has helped finance the current account deficit and significantly contributed to the real economy through the activities of FDI companies.
Direct Employment
500,000 People
2006
1,320,000 People
2021
FDI’s share within the total private sector employment
While the registered employment of FDI companies was around 500,000 people in 2006, it reached 1,320,000 in 2021.
The share of these companies in total registered employment in Türkiye increased from 7.6% in 2006 to 8.8% in 2021.
The Share of FDI Companies In Türkiye's Total Export
In the 2006-2021 period, approximately 31% of Türkiye’s total exports were made by FDI companies.
2.5 TIMES
INCREASE
While the exports of FDI companies were around 25 billion dollars in 2006, they increased to over 63 billion dollars in 2021.
61% MEDIUM HIGH-TECH & HIGH-TECH EXPORTS
In the 2006-2021 period, 61% of exports made by FDI companies consist of medium-high and high technology products. This rate is above the Turkish average.
The Share of FDI Companies In Private Sectors Total R&D Expenditures
In the 2006-2021 period, 30.3% of the total private sector R&D expenditures in Türkiye were made by FDI companies.
730 TOTAL PATENT APPLICATIONS
FDI companies applied for an average of 730 patents annually.
6 TIMES INCREASE
During the 2006-2021 period, the number of FDI companies conducting R&D in Türkiye increased 6-fold.
Local Content Ratio
In the 2006-2021 period, FDI companies made 71.8% of their total supplies locally.
INSIGHTS & FINDINGS
10 Key Findings Guiding the Strategy
As a result of detailed analyses of the global and regional outlook of FDI flows and the trends shaping this outlook, there emerged 10 key findings that guide the strategy. These findings made significant contributions to the definition of quality FDI profiles for Türkiye and the design of the policy areas put forward within the scope of the strategy.
01
While global FDI flows have remained stagnant, there has been a significant increase in FDI inflows into the region where Türkiye is also located.
Türkiye has emerged as one of the most appealing investment destinations in CEEMENA over the last 20 years. Türkiye is expected to further strengthen its leading position in the coming period.
02
High value-added service sector investments in CEEMENA have been on an upward trend in recent years.
As the leader in medium-high-tech manufacturing investments in CEEMENA, Türkiye is likely to benefit from the opportunities emerging in high value-added service sector investments in the mid-term future.
03
The fight against climate change and sustainability concerns has become one of the most significant factors influencing global FDI flows.
Green energy, ESG standards, and sustainability are key for attracting international investors. Türkiye can enhance its appeal by improving green transformation, boosting investments in manufacturing and digital sectors.
04
Nearshoring and friend-shoring trends are gaining importance in the transformation of global value chains and these trends deeply affect global FDI.
Türkiye’s production, talent, and market access make it well-positioned for growth. Aligning with international standards and improving the investment environment can boost its role in R&D and design, strengthening its global value chain position.
05
Rapid growth in digital sectors and digitalization trends in traditional sectors are emerging as significant factors affecting global FDI flows.
Türkiye can boost its market share by enhancing STEM education, improving digital skills, aligning data policies with international standards, and strengthening digital infrastructure.
06
In recent years, protectionist measures, evident in trade and technology conflicts, have begun to affect global FDI flows more profoundly, a trend that has intensified after the pandemic outbreak.
Restrictive policies applied to both inward and outward FDI can create obstacles in many countries, particularly for investors in high-technology sectors. Türkiye, with its investor-friendly environment, can turn this challenge into an opportunity.
07
The number of mega-projects is rapidly increasing on a global scale. CEEMENA in which Türkiye is located is one of the most outstanding destinations for such investments.
Türkiye can attract more mega projects by promoting its incentives, developing large-scale industrial areas, and streamlining bureaucracy.
08
Türkiye is the top country attracting the most expansion investments in CEEMENA.
Existing investors are expanding their investments in Türkiye, capitalizing on the country's opportunities. Promoting this positive perception globally can attract more greenfield investments. Additionally, retaining current investors is key to encouraging further expansion.
09
International investors play a notable role in making Türkiye an outstanding production and export hub in CEEMENA.
International companies account for about 30% of Türkiye's exports, excelling in medium high-tech but lagging slightly in high-tech exports. Türkiye can boost its high-tech exports by attracting more export-oriented investments.
10
Investments in startups have recently become a significant component of global FDI.
Türkiye's tech startups have made significant progress, becoming a top CEEMENA destination for investments. Strengthening the startup ecosystem will attract more high-quality financial FDI.
FDI PROFILES
Quality FDI for Türkiye
01
Climate FDI
Climate FDI
FDI that supports the green transformation plays a crucial role in managing risks related to climate change and in accelerating the transition of economies towards a more sustainable structure.
Read More02
Digital FDI
Digital FDI
Investments supporting digital transformation enhance countries’ competitiveness in various aspects. Particularly, these investments contribute to green transformation and create high quality jobs.
Read More03
Global Value Chain (GVC) Related FDI
Global Value Chain (GVC) Related FDI
Industries deeply embedded in global value chains have greater prospects for generating high-quality employment, enhancing efficiency, and boosting exports. Additionally, such investments promote the dissemination of knowledge and technology transfer via strong linkages with domestic firms.
Read More
04
Knowledge Intensive FDI
Knowledge Intensive FDI
Investments in high-tech and knowledge-intensive sectors elevate the technological level of the country’s goods and services exports, create high-paid jobs, and nourish the start-up ecosystem.
Read More
05
High-quality Job Generating FDI
High-quality Job Generating FDI
Drawing in high-value and knowledge-intensive investments can create high-quality jobs and significantly increase a country’s GDP per capita.
Read More
06
High-end Service FDI
High-end Service FDI
The weight of the services sector in global FDI is steadily increasing. Producing high value-added services is crucial for enhancing the generated value in the economy.
Read More
07
High-quality Financial FDI
High-quality Financial FDI
High-quality financial investments provide funds to innovative start-ups and enable them to grow and internationalize faster.
Read More
08
Regional Development Oriented FDI
Regional Development Oriented FDI
FDI makes significant contributions to increasing the competitiveness of the regions, strengthening the global integration of those regions and reducing the economic disparities within a country.
Read MoreGOAL 1
Increasing Türkiye's FDI Share of Global FDI to 1.5%
The primary objective of the strategy is to boost Türkiye’s share in the global FDI market to 1.5% by 2028, through enhancing its performance in terms of the quality FDI profiles.
1.5%
GOAL 2
Increasing Türkiye’s Regional Share in FDI Inflows to 12%
Türkiye aims to attract 12% of FDI inflows coming to Central and Eastern Europe, the Middle East, and North Africa regions (CEEMENA) by 2028.
12%
GOAL 3
Achieving the 5-year Project Target for Each Quality FDI Profile
Climate FDI
240
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
Digital FDI
240
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
Global Value Chain related FDI
360
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
High-End Service FDI
270
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
High-quality Job Generating FDI
360
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
Knowledge Intensive FDI
300
FDI Projects
Global Value Chains (GVCs) Are Being Reshaped
Geopolitical tensions, climate change...
