Foreign Capital Movements to Developed and Developing Countries and Affecting Factors

Abstract

It is of great importance for countries to attract foreign direct investments and portfolio investments. The reason for this is the positive effects that foreign investments will have on many macroeconomic factors such as growth, employment, exports, national income, interest rates, exchange rate. However, while attracting these scarce investments, they are in competition with other countries. There are various elements that will make countries stand out in this competition. Therefore, foreign investors take these factors into consideration when choosing a country. The factors that determine which countries direct investments and portfolio investments, acting with the principle of profit maximization will be directed to divided into two groups as push and pull factors. The aim of this study is to identify the driving and attractive factors that investors who will make direct investments and portfolio investments are influenced by when choosing the country in which they will invest, to examine the changes in these investments in developed and developing countries within the specified years, to reveal the different reasons for the capital directed to developed and developing countries. It is also to offer a perspective to countries that want to attract these investments to their countries. As a result, it has been concluded that foreign capital entering developed and developing countries does not only consider factors such as cheap labor or interest rate, but also considers many factors, while investments directed to these country groups in normal times prioritize different factors, but act similarly in crisis periods.