Oxford Business Group - Turkey 2012 Report

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Oxford Business Group - Turkey 2012 Report

  1. 1. 7Country ProfilePer capita GDP has tripled over the past decadeGreater spending power among the youth populationIncreased post-secondary school attendanceRising technological entrepreneurship and internet useGeographical location is advantageous for trade
  2. 2. COUNTRY PROFILE 9 Per capita GDP rose from $2900 in 2001 to over $10,500 in 2011Growing influenceA political and economic link between the West and the Middle EastOver the past decade, Turkey has experienced a num- observers, who have accused the country of "turningber of important transitions that have led to demograph- East". Rather, Turkey has risen in prominence as a polit-ic, economic and cultural transformation. These changes ical and trade liaison for Western countries, many ofhave made contemporary Turkey a regional focal point which are isolated from the Middle East and Norththat many Turks regard as an extension of its influence Africa as a result of their history of colonisation andin Ottoman times. imperialism. Thus, as Turkey’s ties with its Middle East- Following the onset of a devastating banking crisis ern neighbours have grown stronger, its importance inand severe economic recession in 2001, the Justice Western politics has increased in kind.and Development Party (AKP) won a landslide victory POPULATION: As of December 2011 the populationin national elections and set about reforming the coun- was estimated at 74.7m, with nearly 77% of Turkeystry’s regulatory environment. A decade of stable AKP citizens residing in urban areas. Istanbul, the countrysleadership has been largely responsible for the coun- largest city, is home to an estimated 18.2% of the pop-try’s economic success, though the political transfor- ulation, or 13.6m people, and is the second-largest citymation of the country has been source of concern in Europe. Ankara, the capital, has 4.8m residents andamong Turkey’s traditional elites. the Aegean city of Izmir has 3.9m. Per capita GDP, which was $2905 in 2001, reached The country is young compared to other regional$10,576 in 2011. The young population is increasing- counterparts – 50% are under the age of 30. The 15-ly mobile and consumption-oriented, which has helped 64 age group makes up 67% of the total population,expand the nations service industries while also caus- indicating that the youth segment’s dominance of theing the current account deficit to triple. country will continue for some time. While the Turkey of today is vastly more affluent than The populace is has a slightly disproportionate num-that of a decade ago, the countrys conservative and ber of males, who comprise 50.2% compared to 49.8%family-oriented culture has seen few changes. Many females. Women account for 43% of university gradu-unmarried men and women still live with their families, ates and are well-represented in white collar positions,even in urban areas, and as a result the availability of particularly in banking and academia. However, femaleresources among the under-30 demographic is quite workplace participation has declined overall, from 34.1%high, fuelling consumption in everything from textiles in 1990 to 21.6% in 2010.to automobiles and cultivating the emergence of an EDUCATION: The country has 166 universities offer-investment culture. This demographic strength is among ing two- and four-year degrees, and the expandingthe most frequently cited reasons international busi- youth population has seen the proliferation of privatenesses have given for entering the Turkish market. training institutes providing post-secondary vocation-FOREIGN POLITICS: The EU accession process has al training. Despite improvements in the educationalseen waning support from the population over the past system, Turkey still lags in gender equality. Females aresix years. The relevance of Europe to Turkish experience under-represented at all levels of education betweenhas declined with both the economic recession and middle school and post-graduate. Additionally, while thestronger political ties with non-European countries. As literacy rate was over 94%, illiteracy was four timesa result, the Turkish government is committed to bal- more common among females.ancing its regional and international interests with soft INFRASTRUCTURE & TECHNOLOGY: Turkey has invest-power and trade, while reducing the role of the West ed significant resources in the expansion of air and roadand NATO in setting policy. This has alarmed many infrastructure over the past decade and continues to THE REPORT Turkey 2012
  3. 3. 10 COUNTRY PROFILE proud of their nation, particularly given its economic growth and success over the past decade, and they are more comfortable with foreigners who demonstrate some knowledge – or at least curiosity – about the his- tory and language of their country. In general, business- people and politicians regard Turkey as an important destination and do not feel that this is a “fly-in, fly-out” market. It is important to maintain eye contact, partic- ularly in the business world, as this is seen as an indi- cation of ones honesty. GEOGRAPHY & NATURAL RESOURCES: Turkey is bor- dered by eight countries and surrounded by four sig- nificant bodies of water. The Bosphorus Strait flows from the Black Sea into the Marmara Sea, dividing the city of Istanbul into two parts. The European portion of the country, comprising 3% of the country’s land mass, is severed again from Anatolia by the Dardanelles, which flows between the Marmara and the Aegean Sea. The country is also bordered by the Mediterranean to the south. In total, Turkey has 7200 km of coastline – near-With a population of 13.6m, Istanbul is the biggest city in the country and the second largest in Europe ly triple the length of its 2600 km of land borders. expand and upgrade both commuter and inter-city rail The country is in a somewhat precarious political sit- options. Public transportation is readily available in uation given the diversity and varying dispositions of most of the major cities and is steadily expanding, bordering nations, but it has for the past decade main- though the long history of habitation in Istanbul and tained a "good neighbour" policy that has seen fairly Anatolia mean projects that require significant digging positive bilateral relations with surrounding countries: can be challenging given the likelihood of coming across Greece and Bulgaria in the west and north, Georgia and historical artefacts. Armenia to the north-east, Azerbaijan and Iran to the The recent increase in per-capita income and eased east, and Iraq and Syria to the south-east. access to credit have resulted in a rise in automobile ECONOMY & CONTRIBUTING SECTORS: While there ownership. Particularly in Istanbul, this has caused con- are some hydrocarbons resources, the country is still gestion, often leading to gridlock during peak com- heavily dependent on imports for electricity genera- muting hours. However, less populated cities have been tion and motorised vehicles. Energy spending accounts better able to cope with the increased traffic. for more than 50% of the nation’s current deficit. Turks are a technology-savvy people; around 25m Increasingly, the government is exploring opportuni- households are served by the internet and over 33m ties in on- and offshore exploration, particularly in the Turks are Facebook users. While this penetration rate east, and in the Black and Mediterranean Seas. is only approximately 40%, usage rate are comparable Despite the dearth of accessible hydrocarbons to the UK, as users are engaged at home, in the office, reserves, Turkey is a major producer of a number of valu- in internet cafes and on their mobile devices. able minerals. It has more than 70% of the world’s LANGUAGE & ETHNICITY: The country is home to a boron reserves and is also home to significant reserves vast number of ethnically distinct groups, though these of coal, copper, gold, iron ore, limestone and marble. distinctions are often subtle and are not officially quan- Approximately 30% of the country’s land is arable and tified by the state. Most statistics estimate the ethnic agriculture accounts for roughly 10% of total GDP. The Turkish population at 70-75%, with Kurds comprising agriculture sector also accounts for 30% of employment; roughly 18% and other minorities 7-12%. however, the scale of the sector’s contribution to GDP Turkish is the official language of the state and the has been reduced by the expansion of both the ener- first language of more than 90% of the population. gy generation and manufacturing industries. The coun- Kurdish, having been officially banned for decades, is try is a net importer of energy and finished goods, but becoming steadily more accepted and is even taught has a thriving manufacturing sector, the output of in some schools; however, societal challenges remain which is predominantly directed to exports. for Kurdish speakers and the language is not often spo- Europe is the nations primary trade partner, with the ken in public outside of the south-east. Arabic is also EU importing 52% of Turkeys output. This has exposed commonly used by about 1.6% of the population, par- the economy to very real risks of a slowdown. As of end- ticularly in the south-east of the country. 2011, however, the Turkish economy has still record- CULTURAL SENSITIVITY: Turkish people are general- ed unexpected growth due to high demand for the ly fairly conservative and expect foreign visitors to countrys exports following the devaluation of the lira. respect national and personal values. It is wise to dress The country suffers from a current account deficit of conservatively for business, and while in day-to-day life roughly 10%, given the deflated value of the lira, which meeting times are less important, punctuality is a must hit a low of €.39 in December 2011. This decrease in the business world. Turks are generally patriotic and can be partly attributed to oil and natural gas imports. www.oxfordbusinessgroup.com/country/Turkey

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