This paper explores the different characteristics in the economic and cultural aspects in the country of Turkey in relation to introducing a foreign business into a new country. The economic characteristics that will be assessed will be factors such as GDP per capita and GDP growth rate, Inflation and Unemployment, FDI inflows, FDI potential index, and FDI performance index, along with the country’s competitive index. There will be an explanation of how the factors mentioned above have effected the country’s economic freedom in the last 10 years and how it changed, how corruption changed in the last 10 years, and how governance changed in the last 10 years. Lastly it will explore the country’s culture relevant to running a business in Turkey such as the political, legal, social, religious, and gender based aspects along with an evaluation of the Hofstede framework for Turkey.
In 2002, Turkey, along with many other countries, suffered from a global economic downturn but came out relatively un-hurt and continued through out the years to work on a more open and free economy (2013 index of). Their largely free-market economy is driven by its industry and service sector with 25% of employment coming from its traditional agriculture ("The world factbook,”). Their GDP per capita (PPP) has had a large growth from 6,800 in 2000 to 14,700 (US$) in 2011 (refer to graph 1.1) ("Index mundi," ). With the global economic conditions and tighter fiscal policy, in 2009 the GDP growth rate experienced a hit but due to Turkey’s well regulated financial markets and banking system it re-bounced with a GDP growth rate of 8.5% in 2011 from a 6% in 2000 and -4.7% in 2009 (refer to graph 1.2) ("Index mundi," ). The inflation rate in Turkey has continued in a decrease in the past 10 years from 45.2% in 2002 to 6.5% in 2011. These numbers show the annual percentage change in consumer prices compares to previous years (refer to graph 1.3)("Index mundi," ). With the slow growth of privatization and the government’s reforms to pursue entrepreneurial activity, Turkey’s unemployment rate in 2011 is at 9.8%, which is lower than it has been in the past 9 years but not from the unemployment in 2001 of 5.6% (refer to graph 1.4) (2013 index of)("Index mundi," ). The FDI’s have been slowed down during recent years due to Europe’s economic troubles which is the source of much of Turkey’s FDI (“The World factbook,” ). In 2008 the FDI for Turkey was 19.5 billion and in 2012 it decreased to 12.6 billion. The FDI potential index captures consist of four key elements that are measured to attract foreign direct investors such as: 1. Attractiveness to the domestic market.
2. Availability of low-cost labor and skill.
3. Availability of natural resources.
4. Presence of transport, energy, and telecom infrastructure. In 2011 Turkey’s FDI Potential Index was seventh out of 177 due to its high ranking in attractiveness of its domestic market, ranking fifth and lowest in infrastructure which ranked 42nd (Erdilek, 2012). Turkey’s ranking for FDI performance index raises to 71st in 2005 then decreases to 108th in 2010, some of this maybe due to the top 3 most problematic factors for doing business in Turkey such as access to financing, tax rates, and inadequately educated workforce (Schwab). Turkey’s global competitive index in 2012-2013 is 43rd out of 144 with a score of 4.5 between 1-7; its index in 2010-2011 is 61st out of 144 with a score of 4.2. For the basic requirements such as institutions, infrastructure, macroeconomic environment, and health and primary education Turkey ranked 57th out of 144 with a score of 4.8 (Schwab). It is in the transition stage between being efficiency driven to innovation driven with its increase in market size, business sophistication, health and primary education, and macroeconomic environment (Schwab).
Some of the changes in economic performance, economic freedom, and competitiveness of Turkey...
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