Incentive or Compensation Government Support for Private Investments in Turkey

Abstract:
This paper examines the effectiveness of government support to private investment in Turkey during the period 1980-2000. It does so by first assessing quantitatively the effects of investment incentives on total factor productivity, employment and investment in the manufacturing sector; and second, by conducting a survey of the views of businessmen who received these incentives within the last decade. The paper finds that investment incentives were ineffective in achieving their intended objectives. It concludes that the so-called investment incentives were not employed to promote/guide investments, but instead were used as a compensation for the deficiencies in the investment environment in the country.