Charles Kovacs November 8, 2005

REASONS FOR INVESTING ABROAD Markets Costs Resources Profits Flight from home base Emotional attachments

SELECTION OF LOCATION Highly competitive and mobile Subject to rapid fluctuations 80% of FDI flows to developed countries Less than 10% of FDI goes to smaller or “non star” developing countries Extensive corporate process: research and due diligence Successful countries must have: Good banking and telecommunications Rule of law Acceptable infrastructure Friendly attitude Exceptional attractiveness may compensate for deficiencies

THE IDEAL INVESTMENT PROMOTION AGENCY (IPA) Functions as a “one-stop shop” for all permits and licenses Is highly responsive and diligent Service quality as good as the best firms in the private sector Advocate of FDI and of policy changes required for attracting FDI Maintains frequent contacts with business NGO’s

TURKEY IN THE NEXT DECADE Increase in FDI in early years due to privatization Improved administrative and legal environment due to EU accession process Political risks will remain Ups and downs of accession process Secularism vs. fundamentalism Corruption and inefficiency Competition for FDI