We test two hypothesis with two different indicators of political risk about the influence political uncertainty has on investments in Turkey. The first hypothesis is that foreign firms invest more. The second is that foreign firms also invest more under a scenario of increasing political risk. We only find support for the first hypothesis, while for the second results show that it is only foreign owned firms in Turkey that experience higher investment adjustment cost due to political risk. The results are robust to endogeneity, different indicators of political risk and different measures of foreign capital participation.
|Publication status||Published - 2020|
|Event||Allied Social Science Association/American Economic Association, Annual Meeting: Middle East Economic Association - Marriott Marquis San Diego Marina, San Diego, United States|
Duration: 3 Jan 2020 → 5 Jan 2020
|Conference||Allied Social Science Association/American Economic Association, Annual Meeting|
|Location||Marriott Marquis San Diego Marina|
|Period||03/01/2020 → 05/01/2020|
- Foreign direct investment
- investment adjustment cost
- relative performance
- political risk
- firm-level panel data
Jensen, C., & Dreyer, J. K. (2020). The Differential Impact of Political Uncertainty on Investment Decisions in Foreign and Domestic Firms in Turkey. Paper presented at Allied Social Science Association/American Economic Association, Annual Meeting, San Diego, United States.