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Country 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

COUNTRY PROFILE

Per capita GDP rose from $2900 in 2001 to over $10,500 in 2011

Over the past decade, Turkey has experienced a num-ber of important transitions that have led to demograph-ic, economic and cultural transformation. These changeshave made contemporary Turkey a regional focal pointthat many Turks regard as an extension of its influencein Ottoman times.

Following the onset of a devastating banking crisisand severe economic recession in 2001, the Justiceand Development Party (AKP) won a landslide victoryin national elections and set about reforming the coun-try’s regulatory environment. A decade of stable AKPleadership has been largely responsible for the coun-try’s economic success, though the political transfor-mation of the country has been source of concernamong Turkey’s traditional elites.

Per capita GDP, which was $2905 in 2001, reached$10,576 in 2011. The young population is increasing-ly mobile and consumption-oriented, which has helpedexpand the nation's service industries while also caus-ing the current account deficit to triple.

While the Turkey of today is vastly more affluent thanthat of a decade ago, the country's conservative andfamily-oriented culture has seen few changes. Manyunmarried men and women still live with their families,even in urban areas, and as a result the availability ofresources among the under-30 demographic is quitehigh, fuelling consumption in everything from textilesto automobiles and cultivating the emergence of aninvestment culture. This demographic strength is amongthe most frequently cited reasons international busi-nesses have given for entering the Turkish market.FOREIGN POLITICS: The EU accession process hasseen waning support from the population over the pastsix years. The relevance of Europe to Turkish experiencehas declined with both the economic recession andstronger political ties with non-European countries. Asa result, the Turkish government is committed to bal-ancing its regional and international interests with softpower and trade, while reducing the role of the Westand NATO in setting policy. This has alarmed many

observers, who have accused the country of "turningEast". Rather, Turkey has risen in prominence as a polit-ical and trade liaison for Western countries, many ofwhich are isolated from the Middle East and NorthAfrica as a result of their history of colonisation andimperialism. Thus, as Turkey’s ties with its Middle East-ern neighbours have grown stronger, its importance inWestern politics has increased in kind.POPULATION: As of December 2011 the populationwas estimated at 74.7m, with nearly 77% of Turkey'scitizens residing in urban areas. Istanbul, the country'slargest city, is home to an estimated 18.2% of the pop-ulation, or 13.6m people, and is the second-largest cityin Europe. Ankara, the capital, has 4.8m residents andthe Aegean city of Izmir has 3.9m.

The country is young compared to other regionalcounterparts – 50% are under the age of 30. The 15-64 age group makes up 67% of the total population,indicating that the youth segment’s dominance of thecountry will continue for some time.

The populace is has a slightly disproportionate num-ber of males, who comprise 50.2% compared to 49.8%females. Women account for 43% of university gradu-ates and are well-represented in white collar positions,particularly in banking and academia. However, femaleworkplace participation has declined overall, from 34.1%in 1990 to 21.6% in 2010.EDUCATION: The country has 166 universities offer-ing two- and four-year degrees, and the expandingyouth population has seen the proliferation of privatetraining institutes providing post-secondary vocation-al training. Despite improvements in the educationalsystem, Turkey still lags in gender equality. Females areunder-represented at all levels of education betweenmiddle school and post-graduate. Additionally, while theliteracy rate was over 94%, illiteracy was four timesmore common among females.INFRASTRUCTURE & TECHNOLOGY: Turkey has invest-ed significant resources in the expansion of air and roadinfrastructure over the past decade and continues to

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THE REPORT Turkey 2012

Growing influenceA political and economic link between the West and the Middle East

COUNTRY PROFILE

expand and upgrade both commuter and inter-city railoptions. Public transportation is readily available inmost of the major cities and is steadily expanding,though the long history of habitation in Istanbul andAnatolia mean projects that require significant diggingcan be challenging given the likelihood of coming acrosshistorical artefacts.

The recent increase in per-capita income and easedaccess to credit have resulted in a rise in automobileownership. Particularly in Istanbul, this has caused con-gestion, often leading to gridlock during peak com-muting hours. However, less populated cities have beenbetter able to cope with the increased traffic.

Turks are a technology-savvy people; around 25mhouseholds are served by the internet and over 33mTurks are Facebook users. While this penetration rateis only approximately 40%, usage rate are comparableto the UK, as users are engaged at home, in the office,in internet cafes and on their mobile devices.LANGUAGE & ETHNICITY: The country is home to avast number of ethnically distinct groups, though thesedistinctions are often subtle and are not officially quan-tified by the state. Most statistics estimate the ethnicTurkish population at 70-75%, with Kurds comprisingroughly 18% and other minorities 7-12%.

Turkish is the official language of the state and thefirst language of more than 90% of the population.Kurdish, having been officially banned for decades, isbecoming steadily more accepted and is even taughtin some schools; however, societal challenges remainfor Kurdish speakers and the language is not often spo-ken in public outside of the south-east. Arabic is alsocommonly used by about 1.6% of the population, par-ticularly in the south-east of the country.CULTURAL SENSITIVITY: Turkish people are general-ly fairly conservative and expect foreign visitors torespect national and personal values. It is wise to dressconservatively for business, and while in day-to-day lifemeeting times are less important, punctuality is a mustin the business world. Turks are generally patriotic and

proud of their nation, particularly given its economicgrowth and success over the past decade, and they aremore comfortable with foreigners who demonstratesome knowledge – or at least curiosity – about the his-tory and language of their country. In general, business-people and politicians regard Turkey as an importantdestination 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 one's honesty.GEOGRAPHY & NATURAL RESOURCES: Turkey is bor-dered by eight countries and surrounded by four sig-nificant bodies of water. The Bosphorus Strait flows fromthe Black Sea into the Marmara Sea, dividing the cityof Istanbul into two parts. The European portion of thecountry, comprising 3% of the country’s land mass, issevered again from Anatolia by the Dardanelles, whichflows between the Marmara and the Aegean Sea. Thecountry is also bordered by the Mediterranean to thesouth. In total, Turkey has 7200 km of coastline – near-ly triple the length of its 2600 km of land borders.

The country is in a somewhat precarious political sit-uation given the diversity and varying dispositions ofbordering nations, but it has for the past decade main-tained a "good neighbour" policy that has seen fairlypositive bilateral relations with surrounding countries:Greece and Bulgaria in the west and north, Georgia andArmenia to the north-east, Azerbaijan and Iran to theeast, and Iraq and Syria to the south-east.ECONOMY & CONTRIBUTING SECTORS: While thereare some hydrocarbons resources, the country is stillheavily dependent on imports for electricity genera-tion and motorised vehicles. Energy spending accountsfor more than 50% of the nation’s current deficit.Increasingly, the government is exploring opportuni-ties in on- and offshore exploration, particularly in theeast, and in the Black and Mediterranean Seas.

Despite the dearth of accessible hydrocarbonsreserves, Turkey is a major producer of a number of valu-able minerals. It has more than 70% of the world’sboron reserves and is also home to significant reservesof coal, copper, gold, iron ore, limestone and marble.

Approximately 30% of the country’s land is arable andagriculture accounts for roughly 10% of total GDP. Theagriculture sector also accounts for 30% of employment;however, the scale of the sector’s contribution to GDPhas been reduced by the expansion of both the ener-gy generation and manufacturing industries. The coun-try is a net importer of energy and finished goods, buthas a thriving manufacturing sector, the output ofwhich is predominantly directed to exports.

Europe is the nation's primary trade partner, with theEU importing 52% of Turkey's output. This has exposedthe economy to very real risks of a slowdown. As of end-2011, however, the Turkish economy has still record-ed unexpected growth due to high demand for thecountry's exports following the devaluation of the lira.The country suffers from a current account deficit ofroughly 10%, given the deflated value of the lira, whichhit a low of €.39 in December 2011. This decrease can be partly attributed to oil and natural gas imports.

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With a population of 13.6m, Istanbul is the biggest city in the country and the second largest in Europe

www.oxfordbusinessgroup.com/country/Turkey