1. Foreign Direct Investment in European Union Members Poland, Romania, Bulgaria and Non-EU member Turkey Okan Büyükbay & Oğuzhan Şahin

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

3. 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.

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 Turkey’s 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 1980’s.

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 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.

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 1980’s 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 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.

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. 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 Romania’s 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 Romania’s 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 1990’s. 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 1990’s. 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 1990’s. 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 1990’s. 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 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.

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 WTO’s 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 WTO’s 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 Turkey’s 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 Turkey’s 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, Turkey’s 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 member’s 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.