Turkey adopted neo-liberal policies in order to increase economic integration into international relation after 1980. As a result of these policies, foreign direct investment (FDI) inflows increased greatly. In 1980 there were 78 FDI firms in Turkey whereas the number increased by 6511 in 2003. Turkey has become a hub of vast hinterland that extends from Balkans to Caucasus and represented a prime focus for foreign investment. For this reason, it is very important to know the characteristics and spatial distribution of FDI firms in Turkey. This study analyzes the spatial distribution of FDI (foreign direct investment) firms among the provinces in Turkey from 1990 to 2003. Providing employment and job opportunities, application of skills and new technologies, transfer of capital , increase in productivity, enhancing exports, spread of domestic firms, and acceleration of economic growth in the developing countries are among the most important benefits of foreign direct investment (FDI). Since the 1990’s foreign direct investment has been considered as the “development motor” for the developing countries by United Nation Commission of Trade and Development (UNCTAD, 2004), and thus it has been encouraged to create the conditions attracting investment. At the beginning of the 1990’s the investments directed to the developing countries had a share below 20% of the world’s investment capacity. However in the middle of the 1990’s this share increased to 40 %. As a result of neo-liberal policies which were made in order to increase the FDI inflows the number of FDI firms increased 29 times. Although in 1990 Turkey was the second developing country to attract the highest FDI with a foreign capital investment of 1 billion USD, after China, it has not been able to maintain this beneficial position in the world. Increase in FDI especially in Turkey after 1990 is less than expected compared to other developing countries. With a total share of 807 billion USD of foreign investment it reached until 1998, Turkey has obtained of 0.15% of the total sum. This share is 27,4% for China, 17.3% for Brazil, 6.2 % for Mexico, 4.2% for Thailand, and 3.4% for Argentina (UNCTAD, 1999, p.477). According to the findings of 2003, with 0.10%, Turkey has a share of 575 million Dollars of the total foreign investment of 560 billion Dollars in the world. In the general perspective of Turkey related to FDI, Istanbul has an importance. Because Istanbul attracts the highest level of foreign investment in Turkey. 75.39% of Turkey’s total capital investment and 63.29% of the total number of firms in Turkey are in Istanbul. Istanbul has attracted 59.63% of the firms which have made investment in industry in Turkey with 55.22% of this capital and 66.35% of the firms making investment in the service sector with 92.33% of the capital. According to the report of YASED, Istanbul held 6174 foreign capital investment in 2003. There is imbalance in the distribution of FDI in Turkey. To prevent this uneven structure, some precautions should be taken. A model is developed to test the agglomeration economies as a demand, urbanization economies, market size, employment structure, government incentives, information cost, locational wealth and infrastructure. Location decisions of foreign investors are generally determined by agglomeration economies as population growth in the provinces and previous investment, infrastructure, amount of bank credit and local market growth.