I was at a meeting in Beijing this week. The city had plenty of blue sky and light traffic. I was told that authorities arranged this to fix their image before the APEC meetings. They barred cars from entering the traffic, closed down factories, and sent public employees to a short holiday. For a short time, China created nicer version of Beijing. Here is a country that really wants to create a good impression.

So you will understand that I took it seriously when a Brazilian friend asked me a question about long-term investments. He said “it feels as though Brazil is getting more than its fair share of direct investments when compared to Turkey. Could it be the impact of geopolitics?” Does having civil wars to the north and south, neighbors like ISIL and Iran and Russia, make Turkey a lousy destination for your money? Because apparently that’s what people think of when they think of Turkey. When people think of Brazil, beaches or colorful birds in the rain forest come to mind. That made me wonder about whether I have thought enough about the real cost of the Iraq-Syria hell our region has been going through.

Let’s say you’re an investor. Following the news, would you like to make a long-term bet on Turkey? You are not testing the waters, mind you, you are building things, planting your capital in a foreign country to collects its fruit in the future. Could that be the reason why there are no global value chains passing through Turkey? This is something we should start thinking about at once.

Let’s look at a few figures. In 2013, Brazil attracted around $80 billion of net foreign direct investment (FDI). Turkey received only around $12,8 billion in that same year, meaning that Brazil got around 6,55 times more than Turkey. Of course Brazil’s economy is roughly twice Turkey’s size. If you take size into account, Brazil still got three times the FDI Turkey received. That is a striking discrepancy. Add this to the fact that in the World Bank’s new 2015 Doing Business Rankings Turkey is ranked 55th, whereas our Latin American friends are 120th among 189 countries. To make things worse, Brazil is ranked 167 out of 189 in the “Starting a Business” sub-index. So why did Brazil receive much more FDI inflows despite their worse rank in doing-business rankings? Is my Brazilian friend right? Is this about location?

It might be. Brazil received 9 times the investment we did in 2000. Then, for a short time around 2005, investment flows to Brazil were only 1.5 times those to Turkey. That is because we were almost on an equal footing for a while. Both countries had suffered financial crises around the turn of the century; President Lula da Silva came to power in Brazil, and Erdoğan in Turkey. Markets rewarded the ensuing stability. But now? Our southern border tips the scales away from Turkey.

Economists like to scoff at things they cannot quantify, but geopolitics might be more relevant to economics than commonly thought. That’s why I think ISIL’s recent rampaging in the region may have been hurting Turkey more than we initially anticipated.

This commentary was published in Hürriyet Daily News on 08.11.2014