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Will Energy Save FDI Inflows to Turkey from the Cool Down of EU Accession Prospects? A Case Study of How Geo-political Alliances and Regional Networks Matter

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Abstract

Turkey has historically struggled to attract foreign investors. This paper discusses how the start of the European Union's accession negotiations in 2005 encompassed a wide set of reforms in several chapters of the acquis communautaire that resulted in higher foreign direct investment (FDI) attraction. However, it seems that the global economic slowdown of 2009 coupled with increasing Euro-skepticism have already started to erode this effect. Only large a volume of foreign investment in the energy sector observed in 2009–13, explained by the energy security strategy of the European Union and the internal liberalization agenda, has prevented the collapse of FDI inflows to Turkey.

Acknowledgements

The authors are grateful to the peer reviewers of the journal of Turkish Studies for their valuable feedback. José Guilherme Reis, Martin Raiser, John Douglas Gillson, Diana Lachy (all of them at the WB) and Özlem Arpac Arconian (University of London, SOAS), provided also much appreciated comments to a previous version of this manuscript, published as a WB Policy Research Working Paper under the title “How regional integration and trans-national energy networks have boosted FDI in Turkey (and may cease to do so).”

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Miguel Eduardo Sánchez-Martín http://orcid.org/0000-0003-4025-8674

Gonzalo Escribano Francés http://orcid.org/0000-0002-7932-1127

Rafael De Arce Borda http://orcid.org/0000-0003-1320-9252

Notes on Contributors

Miguel Eduardo Sánchez-Martín is Senior Economist at the Macroeconomics and Fiscal Management Global Practice of the WB. He has previously worked for the Spanish Institute for Foreign Trade as trade and investment analyst, in both Madrid and Ankara, where he obtained a diploma in Turkish language (Tömer Orta Türkçe Sertifica). He holds an MSc in Political Economy of Development from the University of London, SOAS, and a PhD in Economics from Universidad Autónoma de Madrid. His research interests include sub-national fiscal policies, political economy, FDI and foreign trade, applied to developing economies, and counts with several publications on these topics.

Gonzalo Escribano Francés heads the Energy and Climate Change Programme at the Elcano Royal Institute. He is also Professor of Applied Economics at the Spanish Open University (UNED). He holds a Ph.D. in Economics from the Madrid's Complutense University, has been a visiting researcher at Florida State University and the Universidad Autonoma de Madrid, and associate researcher at the Center for International Relations (Ortega y Gasset Foundation). He also lectures in different post-graduate programs at numerous Spanish and foreign universities on energy geopolitics and the political economy of North Africa. He has participated in various research projects, including the EU's VII Framework and several Euro-Mediterranean FEMISE projects funded by the European Commission. He has received the Research Award of the Spanish Economic and Social Council. His research agenda focuses on international energy issues like the external dimension of the Spanish and European energy policies, energy geopolitics and geo-economics, energy security, the geopolitics of renewable energies and the interaction of energy resources with economic development in producing countries, especially North Africa and Latin America.

Rafael de Arce Borda is Professor of Econometrics at the Universidad Autonoma de Madrid (UAM) and Professeur d'Économie Appliquée at Université Paris Dauphine (UPD). He holds a Phd in Econometrics from the UAM and he has been fellowship professor in several universities (Princeton University, Georgetown University, Southbank University, Université Nancy II, and so on). Currently, he heads the Spanish team of the NOPOOR Project (7th Framework Program) and he has participated in several projects for the European Commission (FEMISE and Euromesco). His fields of interests are focused in Middle East and North Africa countries developing and EU neighborhood issues. He has actively worked in subjects related to renewable energy sources, migration flows and free trade areas between EU and North African countries. He has published more than 30 academic papers and several books and chapters. He is a frequent reviewer of several academic journals such as Applied Economics, Economic Modeling, Political Sciences Review, and Energy Policy. As a consultant, he has worked as advisor for several companies and institutional organizations (REPSOL, IBM, Iberdrola, ISDEFE, United Nations – Link Project, CEPREDE, Banesto, Sanitas).

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