On the interaction between foreign direct investment inflows and international trade: Complementary or substitution? a case study of turkey

Abstract

This paper examines the interaction between foreign direct investment (FDI) and intra industry trade(IIT) in Turkey for the year of 2005. In order to achieve this goal, some of the main country specific determinants of IIT of Turkey were tested. FDI inflow is one of the main country specific determinants of IIT according to our results in accordance with the current literature. Our findings suggest that FDI inflows and IIT are complementary rather than substitute for the case of commercial goods.