Foreign Investment Laws in the Republic of Turkey: A Model for Reform
Pacific McGeorge Global Business & Development Law Journal, Vol. 5, Issue 1, pp. 99-130, Spring 1992
32 Pages Posted: 27 Sep 2011
Date Written: Spring 1992
Abstract
Turkey's laws regulating foreign investment were radically altered during its last two Five Year Plans. The purpose behind these changes was to move away from a policy of import substitution and centralized control, effected by strict customs barriers and bureaucratic regulations which discouraged foreign investment. Historically, the prior policies of public enterprise and government planning were based on a suspicion of foreign investment dating from the founding of the Republic and were, in part, a reaction to centuries of quasi-colonial status imposed upon the Ottoman Empire by European powers. On January 24, 1980, the Turkish government announced that it had taken various measures to liberalize the economy and encourage foreign investment. At the center of this change was a policy which favored private investment over governmental, free trade over protectionism, and foreign investment over economic nationalism. One purpose of this paper is to describe and analyze those changes in legislation relevant to lawyers representing foreigners interested in investing in Turkey.
A second purpose of this paper is to examine, in economic terms, how well the Turkish experiment has worked. The policies of public ownership, protectionism, and economic nationalism found in Turkey prior to 1980 were similar to those held by most developing and east bloc nations until the withdrawal of the Soviet Union from Eastern Europe and their perceived failure in developing countries. Now lawmakers in many countries are being asked to structure reforms which will promote economic growth. Because the Turkish economic reform process has lasted a decade, it represents a working model of the type of legislation which nations similarly situated might adopt.
Keywords: Turkey, foreign investment, customs barriers, centralized control, import substitution, government planning, free trade, protectionism, economic nationalism, developing nations, east bloc nations, economic reform, economic history
JEL Classification: F14, F13, F21, K29, K39, N15, N75
Suggested Citation: Suggested Citation