Turkey - Economic analysis of government's policies, investment climate and political risk.

THE

McKEEVER INSTITUTE

OF

ECONOMIC POLICY

ANALYSIS

TURKEY: Economic Policy Analysis

This site presents an analysis of the Turkish government's economic policies compared to a list of 34 economic policies as prepared by Mr. Ozan Gazi Onder with the McKeever Institute of Economic Policy Analysis in the Spring of 2009 (MIEPA). To read the analysis scroll through this site. To learn more about the background policies, click here

Introduction and Policy Recommendations

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Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Turkey is shown below. The ratings herein are based on the following rating scale:

RATING SCALE

5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2003. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

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TURKEY:

Comparison of Turkey's economic policies to MIEPA criteria as prepared by native student of Turkey, Mr. Ozan Gazi Onder, studying in San Francisco in Spring 2009.

RATING SUMMARY

POLICY NUMBER      RAW SCORE   ADJUSTED SCORE    POSSIBLE   PERCENTAGE

        1               2.9           8.7             15.0        58%

        2               2.3           6.9             15.0        46

        3               2.5           7.5             15.0        50

        4               3.9          11.7             15.0        78

        5               3.4          10.2             15.0        68

        6               3.2           9.6             15.0        64

        7               4.1          12.3             15.0        82

        8               2.2           6.6             15.0        44

        9               2.4           7.2             15.0        48

        10              4.0          12.0             15.0        80

        11              3.3           9.9             15.0        66

        12              3.0           6.0             10.0        60

        13              3.9           7.8             10.0        78

        14              3.7           7.4             10.0        74

        15              2.0           4.0             10.0        40

        16              3.1           6.2             10.0        62

        17              2.6           5.2             10.0        52

        18              2.4           4.8             10.0        48

        19              2.5           5.0             10.0        50

        20              2.9           5.8             10.0        58

        21              1.8           3.6             10.0        36

        22              2.1           4.2             10.0        42

        23              2.1           4.2             10.0        42

        24              2.1           4.2             10.0        42

        25              2.0           4.0             10.0        40

        26              4.3           8.6             10.0        86

        27              3.6           7.2             10.0        72

        28              3.2           6.4             10.0        64

        29              2.3           2.3              5.0        46 

        30              2.2           2.2              5.0        44

        31              3.0           3.0              5.0        60

        32              2.4           2.4              5.0        48

        33              4.0           4.0              5.0        80

        34              2.5           2.5              5.0        50

   TOTAL               97.9         213.6            375.0       57.0%
                      =====        ======            =====       =====

TURKEY: Individual Policies

1. Freedom from Internal Control: 2.9

Individuals are free to move, speak and invest. However, this freedom sometimes depends on the areas in which citizens live. Even though Turkey is a secular country, freedom is limited with national values and religion. In the big cities of Turkey, individuals are almost as free as developed countries. In contrast, in some of the eastern areas, religion rules exceed democracy. Therefore, in those areas, individuals mostly live within limited freedom.

Sources:

(1) www.tusiadgirisimcilik.org/sunular/mehmet%20sami.ppt . An entrepreneurship website (2)Personal

2. Freedom of speech: 2.3

In Turkey, there is a clash between freedom of speech and the public laws. For instance, according to Turkish constitution, every body is free to think and speak. People don’t have to express their ideas unless they want and also they can’t be blamed for their thoughts. However, there is a law which was accepted by the government in 2003 and says that ‘’It’s not allowed to blame being Turkish, the republic of Turkey and the institutions of the government.’’ This law was applied by the military and the conservative political institutions.

According to Reporters Without Borders’ world report, Turkey is 98th country which has freedom in media. As a result, freedom of speech is limited in Turkey.

Sources:

(1) http://tr.shvoong.com/law-and-politics/law/1747204-ifade-%C3%B6zg%C3%BCrl%C3%BC%C4%9F%C3%BC/ online book websitehttp://tr.shvoong.com (2) http://tr.wikipedia.org/wiki/%C4%B0fade_%C3%B6zg%C3%BCrl%C3%BC%C4%9F%C3%BC wikipedia

3. Effective, fair Police Force: 2.5

The internal security system in Turkey is not enough. This brings some question marks about the power of the authority. Most of the Turkish citizens believe that there is no enough justice for criminals. The crime rate is increasing and the first reason is the passivity of the authorities. For some people, crime is becoming a ‘’job’’ and this causes greater mafia activities in the big cities. The crime rate increased dramatically from 2002 to 2007. The safest big city is the capital city (Ankara).

Furthermore the security is not sufficient in the eastern part of Turkey so, the eastern area is not attractive for foreign and domestic investments. The Turkish government is trying to develop the eastern cities.

Sources:

(1) http://www.dunya.com/haberArsiv.asp?id=273 (2) Online newspaper

4. Private Property: 3.9

Turkish people can gain private properties and the laws protect property rights. Proprietorship certificate holders have rights to keep, rent or sell their own properties and the Turkish justice system protects these rights, very well. Also, buying properties by the foreigners were facilitated by the Turkish Government. According to the Turkish laws, foreign individuals and businesses can buy property in Turkey but the foreign associations, foundations and communities can not buy.

Sources:

(1) http://ansiklopedi.turkcebilgi.com/Yabanc%C4%B1lar%C4%B1n_T%C3%BCrkiye'de_m%C3%BClk_al%C4%B1m%C4%B1 Online encyclopedia (2) Personal

5. Communication Systems: 3.4

The all communication facilities are available in the most part of Turkey. For example, The telephone infrastructure is an organized, efficiently working direct dialing system. Also, recently there was a huge increase in the number of internet users. Not only internet facilities but also the other communication services are being developed. Today, there are more than 260 TV channels in Turkey (including local and international channels)

Sources:

(1) http://ansiklopedi.turkcebilgi.com/T%C3%BCrkiye'de_Kitle_%C4%B0leti%C5%9Fim_Ara%C3%A7lar%C4%B1_ve_Kamuoyu online encyclopedia

6. Commercial Banks: 3.2

Generally, in Turkey, the operation of the commercial banks is fine. Before 2003, some people experienced with fake banks and defraudation. After 2003, some serious actions were taken in order to arrange and develop the commercial banking system. Now commercial banks are financing business operations better than before. Today, there are 33 national commercial banks, one central bank and 15 foreign banks exist in Turkey.

The management of the commercial banks became clearer and as a result of intervention of the central bank, the interest rates were decreased to a level that ought to be.

Today, there are 33 national commercial banks, one central bank and 15 foreign banks exist in Turkey.

Sources:

(1) http://www.msxlabs.org/forum/ekonomi/12418-turkiyede-bankacilik.html Online business form (2) http://sosyalbilgilerci.blogcu.com/turkiye-deki-bankacilik-nedir-tarihcesi-nedir_20355961.html Online social science sources (2) Personal Country-Study: Turkey

7. Transportation: 4.1

Roads, rail and air transportation are available in almost every city in Turkey. Because Turkey is a peninsula where Black sea, Mediterranean and the Aegean intersect, some cities have also the sea transportation. People can go anywhere they want in Turkey without any transportation problem.

The government started working on new projects in order to develop the transportation. For instance, a high speed railroad is being built between Ankara and Istanbul to decrease 6.5 transportation hours to 3.10 hours. In addition, the construction of high speed railroad system between the other major cities will be started soon. Also people can travel to Armenia, Bulgaria, Greece, Georgia, Iran, Iraq, Syria by using railroad transportation.

Sources:

(1) http://en.wikipedia.org/wiki/Transport_in_Turkey wikipedia (2): Personal

8. Education: 2.2

Comparing to developed countries, Turkey gives less educational opportunities. For instance, in order to start studying a major that you wish, you need to take the university exams and get a high score. For that reason, a lot of people can’t study the materials that they want. The worst case is that the high school students have to choose a specific major to start studying such as math or social science. After they choose a major and start studying, they are not given an opportunity to change their major. These absolute necessities decrease young students’ productivity. In Turkey, 10% of the people graduated from university and this rate is almost 50% in Western Europe. Also, the rate of graduating from high school is 45%. This rate is almost 80% in the developed countries.

Most of the universities also don’t have good educational system. However a few of them have quality education and offer international degrees. Students must get high scores in the university exams in order to apply for these universities.

Sources:

(1) http://en.wikipedia.org/wiki/Education_in_Turkey wikipedia (education in Turkey) (2) http://www.acikradyo.com.tr/i/img/text/OzelDershane.htm (3) http://www.belgehaber.com/haber.php?haber_id=4325 (4) http://www.belgehaber.com/haber.php?haber_id=4325

9. Social Mobility: 2.4

As you know, in developing countries, the income distribution is usually unfair. In Turkey, unfortunately, the working people can not obtain the living standarts that they deserve. People, who don’t have good educational background, find jobs by their family connections.

Educated Turkish people are not as valuable as educated people in developed countries. Furthermore, in Turkey employment opportunities are more limited. For that reason, only the people who graduated from well respected universities, can get what they deserve.

Sources:

(1) http://wowturkey.com/forum/viewtopic.php?t=17941 Turkish Forum (2) Personal

10. Freedom from Outside Control: 4.0

Turkish citizens who live in Turkey, can only be judged or arrested by the Turkish Government. Foreign countries must get permission from the Turkish government in order to make process about their citizens in Turkey. The laws are very strict about the inside control. In order to make process about Turkish citizens who live in Turkey, the foreign countries must accomplish the following conditions.

They must show the report to the Turkish government that they prepared and had it stamped and signed by Turkish consulate in their countries. Second, they need to show their laws and reports in order to persuade the Turkish government that the citizen(s) broke the laws. The request shouldn’t be traversal to the Turkish justice system. Plus, the guilty Turkish citizen must not have military and political problems.

Sources:

(1)http://tr.wikisource.org/wiki/T%C3%BCrk_Vatanda%C5%9Flar%C4%B1_Hakk%C4%B1nda_Yabanc%C4%B1_%C3%9Clke_Mahkemelerinden_Ve_Yabanc%C4%B1lar_Hakk%C4%B1nda_T%C3%BCrk_Mahkemelerinden_Verilen_Ceza_Mahkumiyetlerinin_%C4%B0nfaz%C4%B1na_Dair_Kanun Wikisource description (2) Personal

11. Foreign Currency Transactions: 3.3

Usually, Turkish currency (Turkish Lira) is used to conduct the businesses in Turkey. In some places, foreigners can use dollars and euro for trade. In big cities, foreigners are expected to convert their currency into the Turkish currency and they can find so many places to convert their currency.

During the period in which Turkey is trying to join the European Union, the euro became more common in businesses. Furthermore, there are so many Turkish people who buy dollar and euro as a result of rapid changes in the value of Turkish currency. Also, the commercial banks started offering dollar, euro and yen as a credit.

Sources:

(1)http://www.articlesbase.com/loans-articles/konut-kredisini-hangi-para-biriminden-almal-dviz-mi-ytl-mi-263479.html free online articles dictionary (2): Personal

12. Border Control: 3.0

Turkey has strong border controls. However, eastern and south-eastern controls are still weak for terrorist attacks (PKK) and should be empowered. The PKK rebels are still can pass from the eastern borders. ASELSAN (Turkish military engineering technologies) is trying to develop new technologies in order to improve the eastern borders.

Because of having geopolitics position, Turkey is in the intersection point of transition itineraries. For that reason, the smuggling rate is too high. Especially, the illegal drugs are sent to the West from the East by using Turkey. Turkey is considered the shortest way of the transportation of illegal drugs. For that reason, Turkey has been the bridge of the illegal drug traffic, for many years. Recently, The Turkish government started work in order to reduce the smuggling rate. Today, Turkey is one of the countries which are working seriously against of smuggling.

If Turkey becomes a member of the European Union, even if it is not a member of Schengen, the internal control will be decreased. Turkey is planning to change it’s border controls in order to reach the European Union standarts. For that reason, Turkey started a project which takes 15 years and costs 2 billion euros. Using new security technologies is one of the goals of this project.

Sources:

(1) http://www.abhaber.com/haber.php?id=849 A website about EU news. (2) http://www.dunyagazetesi.com.tr/haberArsiv.asp?id=273

13. Currency: 3.9

The currency is ‘’Turkish Lira(TL)’’ and ‘’Kurush (100 kurush= 1 Turkish Lira). Every one uses Turkish Lira as currency. The Turkish government does the all money transactions by using Turkish lira.

In most places, it is strongly recommended to people to convert their currency into Turkish Lira. However, in some places, dollar and euro are also accepted by businesses.

Sorces:

(1) http://answers.yahoo.com/question/index?qid=20080813111657AAt4z0Z Yahoo (2)Personal

14. Cultural, Language Homogeneity: 3.7

In most places of Turkey, people speak only Turkish. Even the people, whose native language is not Turkish, know how to speak Turkish and the business language in Turkey is only Turkish.

There are many minorities in Turkey such as Kurdish people, Armenians, Arabic people, Greeks, Turkmens and Jewish people. The word ‘’Turk’’ identifies the all majority and minorities. There are 50 million Turkish, 15 million Kurdish, 1 million Georgians, 1 million Albanians, 80.000 Laz people, 870.000 Arabs and 60.000 Armenians. Also, the interesting thing is the number of the minorities, who are losing their original identification, is increasing. For instance, almost half of the new generation Albanians speak only Turkish.

Even though most people are muslim in Turkey, there are also different religions, especially in the big cities. In most places, there is not any ethnic conflict. However, recently, because of the terrorist attacks, some conflicts occurred between Kurdish and Turkish people.

Sources:

(1) http://www.genelsecimler.net/belgeler%5CTurkiye'deki%20Etnik%20Gruplar.htm A web site describes election in Turkey (2) Personal (3) http://www.alemim.net/forum/genc-bakis/12650-turkiye-deki-etnik-irklarin-nufus-dagilimlari.html A forum website

15. Political Effectiveness: 2.0

It’s difficult to say that the rural areas are governed as well as urban areas. The government generally, focuses on the big cities, because there is a huge population difference between local and urban areas. Furthermore, the eastern Turkish people are complaining about inadequate education, electricity and water. For that reason, most of the public workers do not want to work in the eastern and south-eastern part of Turkey

The ministry of rural facilities started working on some projects in order to develop the rural areas. However, these projects are not enough and there are so many people, who migrate to the urban areas from the rural areas as a result of inadequate facilities.

Sources:

(1) Personal (2)www.tumgazeteler.com A Turkish newspaper web site

16. Institutional Stability: 3.1

Some of the Turkish Institutions are very strong and stable for more than a hundred years. Most of these institutions existed before the establishment of Modern Turkey. However, some of them were disorganized so these institutions were re-arranged by Ataturk, who is the founder of Modern Turkey.

Also the Turkish government decided to make some re-configurations for some institutions in order to reach the European Union Standarts because the functions of some public institutions are not sufficient.

Sources:

(1) Personal (2) http://www.arem.gov.tr/proje/diger/itfaiye/itfaiye.pdf Turkish fire fighting department

17. Honest Government: 2.6

Unfortunately, in the past some of the government institutions were used as ‘’trade-houses’’ because the judgment system didn’t work very well. So many businesses were complaining about high taxes and unstable procedures. Most of Turkish people believed that government institutions were working to make profit from the citizens.

Today, there are still some average public functionaries who have too high living standarts. Some of the institutions had experience in defraudation. The Turkish society started some campaigns against of the defraudation in the public institutions. The most defraudation claims are in the customs undersecretaryship.

Sources:

(1) http://www.anayurtgazetesi.com/default.asp?page=yazar&id=162 A Turkish newspaper website (2)Personal

18. Common Laws: 2.4

It’s difficult to say that the laws are working fairly. There are so many politicians and businessmen, who have involved in some illegal activities, are free and don’t have criminal records. One of the worst problems of Turkey is swindling activities which were done by some businessmen and bankers.

Unfortunately, some rich criminals were able to be released by paying some fixes. Also, some of the politicians, who involved in illegal activities such as doing fraudulent, used their political extraterritorialities to avoid punishments.

Today, this inequality is not as much as before. The new government started some arrangements against of the inequality. For that reason, Turkish government received some low scores from the E.U. Human Rights. People, who faced unfair justice systems, sued the Turkish Government by applying E.U. human rights.

Sources:

(1) personal (2) http://www.hukuki.net/forum/archive/index.php?t-22765.html. A web site discusses the justice systems in Turkey

19. Protection of Public Health and Safety: 2.5

In Turkey, the food inspections are getting more common. Especially, during the time in which Turkey tries to join to the European Union, Turkish government started taking some precautions about food inspections. But Turkey still has problems with health issues. Drinking and operating water is not enough and it affects people’s health negatively. Some places’ water are becoming dirty, because there are deficiencies and some problems in the drainage systems. These problems cause disease. The production, transportation and preparation of foods are inspected by the Turkish Government. However the control of restaurants, butchers and slaughterhouses, is not sufficient.

Also the infant morality rate is 28.7 out of 1000. Although, the rate is high, it decreased double from 1997 to 2003. The most important problems about the public health are zoonotic, illnesses result of making the land dirty, bird flu and anthrax.

Sources:

(1) http://www.hasuder.org/basinacimlama/salginlar.htm a medical website (2)The T.V. Channel website http://www.ntvmsnbc.com/news/374861.asp

20. Economic Statistics: 2.9

The economic statistics are operated by Turkish Statistics Institution (TUIK) and the most of the statistics are accurate and trustworthy. The statistical data, which are prepared by the Turkish Statistics Institution, can not be given to anybody before starting using. The statistics are about some general subjects such as election and justice, environment and energy, Export, Inflation, business, Tourism, social security and health, national calculations, population and economics, technology and science.

Also there are some newspapers and magazines, which create their own statistical information and they update those information, regularly. For instance, the monthly statistics bulletin, whose objective is to show the indications of the economy, has been published since 1952.

Sources:

(1) A University’s website http://web.bilkent.edu.tr/mirrors/www.die.gov.tr/TURKISH/yayink.html (2) Turkish Statistics Institution’s website http://www.tuik.gov.tr/PreYasalUyari.do

21. Government Debt: 1.8

Turkey has too much internal and external dept and Turkey is in a difficult situation to pay it’s external debts. The debt to foreigners and citizens are increasing. The total of Turkey is around $247 billion. That is the reason why Turkey borrowed money from IMF and European Union’s Economic institutions. Some Economists say that the reason of increase in the external debts is that there is not enough foreign capital in Turkey. Instead of long term investments, foreigners would like to lend money to Turkey in short terms and they want to get their money back, quickly.

Every one in Turkey is aware of this economic problem. Turkish government also suffers from the interest rates of these debts. Turkey is still trying to borrow money from IMF.

Sources:

(1): http://www.radikal.com.tr/haber.php?haberno=22672 A Turkish newspaper (2) http://www.ekodialog.com/kamu_yonetimi/turkiye_dis_borclar.html A Turkish website about the public issues

22. Domestic Budget Management: 2.1

Budget deficits are decreasing in Turkey. Budget deficit occurred for 59 years in Turkey’s whole 82 year life. Turkey had too much budget deficit in last 50 years. $171.3 billion budget deficit occurred in last 10 years. In 2001 the budget deficit rate was 16 percent of the GNP, and in 2005, this rate decreased to 2 percent. So, the government is hopeful about the decrease in the budget deficit.

Source: (1) http://www.megaforum.com/diger-dersler/63611-turkiyenin-butce-aciklari.html A Turkish forum (2) Personal

23. Central Bank: 2.1

Turkish central bank can make decisions in some cases without political restraints. For example, although the tenure of governors is 5 years, in Turkey governors worked for only 2.5 years between 1980 and 1996. In those periods, the political freedom of the central bank was low. Turkish central bank has still low independence in institutional arrangements, the relationship with the government and placements.

According to the Turkish constitution, the central banks are independent. However, in Turkey, some laws may be denied by the government.

Source:

(1) http://iibf.erciyes.edu.tr/akademik/kum/merkezbank.htm A University’s economic research website (2) Personal

24. High Wage Policies: 2.1

In Turkey, wages are lower than the European countries. Workers can’t make enough money to consume their basic necessities. Unions are trying to bargain with the government to increase the workers’ wages, but they still can’t protect their workers from lower-wage workers. In Turkey, the minimum wage is not enough to provide the needs of a family. It’s difficult to say that Turkey is successful in wage policies. Working class can afford to buy consumer goods but it’s below basic living necessities.

Although, Turkey is 6th biggest economy of Europe, the per capita is 4 times smaller than European average. Turkey is one of the countries, which use their’s budgets iniquitously.

The minimum wage doesn’t include health, education, energy, transportation and housing.

Source:

(1)http://www.turkish-media.com/forum/lofiversion/index.php/t13351.html (2) Baturay Ozden (A Turkish economist, a member of Istanbul youth platform (interviewed)

25. Environmental Protection: 2.0

Air pollution, especially smog is a important problem in the big cities of Turkey. Cars and energy consuming increased the air pollution. Turkey should create some protections about the environment, otherwise the problem will become worse. Turkey’s energy consumption has increased extremely in last 20 years and it’s economic policies are encouraging energy waste. The other problem is that most Turkish people are not still sensitive and interested in the environmental protection issues.

Turkish government started look for some solutions to reduce the air pollution in order to meet the European Union Standards. The environment ministry is still trying to work with the other environmental institutions. Turkey performs ‘’the National environment strategy and action Plan’’ whose budget was contributed by the World Bank. Also, Turkey started working with the other countries to protect the environment.

Source:

(1) http://www.nuce.boun.edu.tr/turkey.html a research website (2) http://ansiklopedi.turkcebilgi.com/T%C3%BCrkiye'de_%C3%87evre_Koruma A Turkish online encyclopedia website (3)Personal

26. Strong Army: 4.3

Turkish army is one of the largest defensive armies in the world and it’s the second largest army of NATO. The core of the modern Turkish army is inherited by the Ottoman Empire. Turkish army had an important role in Cyprus and the Korean War. Recently, Turkish air and land force are trying to defeat the terrorists, who are planning to attack Turkey. The name of those terrorists’ organization is PKK, whose objective is to get land from Turkey and establish a country named ‘’Free Kurdistan‘’. Sometimes, it’s difficult to create security in the some regions of eastern Turkey, where the terrorists are located in. Also, Turkey is still keeping it’s forces in Cyprus in order to be ready for an probable immediate attack from Greece.

Turkey has been exported it’s defense systems from other countries for many years. Turkey decided to improve it’s own domestic defense production and still working on it. The government is still developing the military technologies. The 41.6 percent of Turkish Army defense is domestic production. However, Turkey is decreasing the money, which it spends on the national defense. In last 11 years, it decreased from10.5 percent to 6.4 percent.

Sources:

(1): http://en.wikipedia.org/wiki/Turkish_Army (2)Personal (3) www.hurriyet.com.tr A Turkish newspaper

27. Foreign Trade Impact: 3.6

Foreign trade in Turkey, has been liberalizing since 1980. If you look at the history of Turkey’s foreign trade, you will see that there was too much deficit. However, this amount is decreasing. The deficit of Turkey was 20 billion dollars in 2008.

Now, 36.98 percent of the Turkish economy is depending on the foreign trade. Turkey’s export consists of modernized industry and agriculture sector and the export rate is getting larger. In 2008, Turkey had the 5th largest increasing rate in exporting. In short, Turkish government and export firms are both hopeful about the future of their exports. The export amount of Turkey was 132 billion Turkish liras(81 billion USD) and the import amount was 202 billion Turkish liras(123 billion USD), and the GDP(purchasing power parity) was $930 billion.

The global financial crisis had an important effect on the export. For that reason, the export in 2008 decreased by 25 percent comparing to the export in 2007.

Source:

(1) http://www.londravizyon.com/node/927 A research website (2) www.cia.gov (3) http://www.zaman.com.tr/haber.do?haberno=809949 A newspaper website

28. Protection of Foreign Currency Earning Enterprises: 3.2

As you know, Turkey is an industrializing country and Turkish companies more likely exports unindustrialized products rather than industrialized products. Turkey started compete with the foreign products in 1980. Now, Turkish banks give credits to the companies, which are planning to start exporting so, the government contributes exporting companies.

Furthermore, in order to defeat the economic crisis with the increase in dollar currency, Turkish Export Institution started soma campaigns and advertisements such as ‘Buy Now From Turkey!’. Therefore, they support Turkish products, which are getting more attractive in the world markets. Plus, the government is developing more export web sites, which introduce the quality of the Turkish products and their companies.

Source:

(1) http://www.ntvmsnbc.com/news/97693.asp a Chanel news (2)Personal

29. Management of Foreign Currency Budget: 2.3

Turkey’s current account deficit is high. Turkey’s biggest economic problem is the imbalance of external financing and recently the imbalance rate has increased. In2008,the deficit increased to $7 billion. Also, at the same time, the entrances which are based on the current transactions 34.2 percent. Standard&Poor’s said that Turkey’s current deficit rate increased to 7.3 percent of it’s GDP.

Sources:

(1) http://muhasebeturk.org/ekonomi-haberleri/4585-turkiye-nin-cari-acigi-cok-yuksek.html Accounting News (2) http://www.porttakal.com/haber-s-amp-p-turkiye-nin-kredi-notunu-teyit-etti-153696.html News

30-Layers of Collective action 2.2

In Turkey, every city and town has a council. However, only the councils of the big cities have effective mechanism to govern. Most of the city councils have only small budgets. For that reason, it’s too difficult for them to contribute the activities and enterprises of the society. Right now, Turkey has 1549 local city councils and 865 of them were established by villages. They all are belong to the ‘’Turkish City Councils’ Union’’.

Most of the city councils are not successful and can’t do their objectives on the expected level. The main reason is that no matter if they are big or small councils, theirs responsibilities and objectives are arranged in same. For instance, a town, whose population is 2000 and a city, whose population is 300.000, have the same liabilities. This situation inhibits the development of the city councils.

Source (1)- Personal (2)-http://www.konrad.org.tr/Fransa%20Almanya/Sarbak.PDF -Turkish city councils‘ website

31. Pro-Business Climate: 3.0

Most of Turkish society has still ‘’traditional’’ business culture, so entrepreneurship and development organizations are still ‘’new’’ to the society. Usually, educated people value on entrepreneurship and entrepreneurship ideas. The number of people, who are interested in entrepreneurship, is increasing. On the other hand, there are not so many people who are interested in, because it’s still a new conception. If you compare Turkey to the other countries, people value less on enterprises leadership.

According to a survey, which was created by a economics magazine named ‘’Platin’’, the most important business skills that Turkish society expect, are taking risks, creativity, leadership and self-confidence. Also, Turkish Industrialists and businessmen organization (TUSIAD) says that Turkey is the 22nd country (out of 30) in the entrepreneurship competition.

Source:

(1) http://www.insankaynaklari.com/ikdotnet/icerikdetay.aspx?KayitNo=2867 (A human resources web site) (2) http://www.tumgazeteler.com/?a=251674 (a newspaper website)

32. Government Enterprises: 2.4

In Turkey, the government enterprises are concentrated in some particular sectors such as Turkish Airlines, and the profit, which comes from these sectors highly affect the government’s budget. However, the privatization in public companies became serious restrictions in the government’s budget.

The Turkish Government doesn’t pay enough subsidies for enterprises and the financial institutions don’t encourage people to get into entrepreneurship. It’s still new and so many people who’re interested in entrepreneurship, complain about not getting paid enough subsidies for their entrepreneurship projects.

There are almost 90 government owned businesses in Turkey. We can classify them in terms of economic institutions, social security, city council institutions , prime ministry and ministry, military institutions, Resource centers and other government businesses. Most of the government businesses are not very profitable that is why, some of them are being privatized.

There are also organized state economic enterprises set up by the government and at least 50 percent of their shares are belong to the government. These state economic enterprises include transportation, energy enterprises, banks which own companies and communications. Some managers and unions are against of privatization because they are concern that, in the control of private management, the enterprises will reduce unprofitable subsidies and overstaffing.

Source:

(1) Baturay Ozden, an economist and a member of Istanbul Youth Program (2) http://www.mersinesob.org.tr/haberler/dincer-giri-imciye-devlet-destegi-arttirilmali.html. A local news-website (3)http://yunus.hacettepe.edu.tr/~sadi/dersler/projeler/bto102_bahar04/erdogan.html#di?er A university website

33. International Security Agreements: 4.0

Turkey is a member of almost 70 international organizations such as NATO, INTERPOL, G-20, UNESCO. For International security, Turkish Military Power(TSK) has an important role in the middle east and eastern Europe. As a result, the national and international security agreements are highly developed. However, there are Eastern Kurdish rebels whose objectives are to get the eastern Turkey and create their own Kurdish country named ‘’Kurdistan’’. Turkey has been trying to improve the national security against of the rebels’ attack in the big cities. Furthermore, Turkey is still making some international security agreements with the other middle eastern countries to avoid the Kurdish terrorism organization.(PKK).

Also, Turkey is a country which connects Asia and Europe. That is why, Turkey has a very important strategic region. As a result, having many resources, military power and strategic regional importance, Turkey make many agreements with some Middle Eastern and European countries including international security.

Source: (1): www.cia.gov (2)http://www.tumgazeteler.com/?a=4066311# A newspaper website (3) Personal

34. Protection of Domestic Enterprises From Government Mandated Costs: 2.5

Turkish companies pay too much taxes. The tax rate has been increased very highly since 1985. In 1985, the tax amount was 15.4 percent and in 2002 this number increased to 33.2 percent. In Turkey, the firms are complaining about the increases in taxes and not receiving enough support from the government. This tax increase is even higher than the average of the countries of America. For example, the vehicle tax amount in Turkey, is ten times larger than in European countries. Similarly, 20 percent of the foreign owned companies pay 20 percent of their total profit, as taxes. The government has started reducing on taxes in order to contribute new enterprises.

Source: (2) James Gwartney and Robert Lawson: Economic Freedom of the World: 2004 Annual Report. Rates for 2005 have been added by the author. (3) http://www.bilgiportal.com/v1/idx/64/3040/Haberler/makale/Gen-giriimcilere-5-yl-vergi-yok.html a Turkish web site for young entrepreneurs

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CONTENTS OF SITE

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Introduction and Policy Recommendations

Winning Essays: There Are Alternatives Project (TAA)

Essay: Balanced Trade: Toward the Future of Economics

Moral Economics

McKEEVER INSTITUTE of ECONOMIC POLICY ANALYSIS

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