Economic Analysis Turkeys Potential For Foreign Direct Investment Economics Essay

The emerging market of Turkey is difficult to defy. It benefits from its geographic place and market size being positioned about strategically to entree the Central Asian, European and Middle Eastern markets ( Demirbag & A ; Tatogly 2008 ) coupled with its ain market with a population of 74 Million ( World Bank 2009 ) it is no surprise that there has been an addition in foreign direct investing over the last 20 old ages. Turkey has used the growing to reconstitute its economic policies taking to non merely better the concern environment ( Nas 2009 ) but to besides do it more favorable to possible foreign investors. Over the last twelvemonth Turkey ‘s growing has slowed due to a downswing in the planetary economic system which has affected unemployment, FDI and consumer assurance nevertheless as the universe economic system strengthens so does Turkey ‘s.

Opportunity

Turkey has benefited from high GDP growing, transcending 6 % in the last 10 old ages ( Cardinal Intelligence Agency 2010 ) nevertheless due to the Global Financial Crisis the state suffered through four quarters of negative growing in 2008 lessening by 6 % in 2009 ( Euromonitor 2010 ) . GDP is expected to lift once more in 2010 and to 4.5 % in 2011 ( Economic Outlook 2010 ) . Equally good as being the largest economic system in Eastern Europe, ‘the state ‘s cardinal growing rates ( GDP, GNI, substructure etc ) since 2001 have been the highest in the part ‘ ( Apaydin 2009 ) .

Turkey ‘s restructure in economic policy saw it present inducements to promote investors and it continues to work with FDI companies to develop farther policies that will see investing addition. One such policy saw a corporate revenue enhancement rate of 30 % reduced to 20 % ( Euromonitor 2010 ) and possible corporate revenue enhancement and employee paysheet freedoms introduced for fabrication companies ( Nas 2009 ) . Highly skilled, low labor rates and low operating expense costs has besides been promoting investing ( Kumar, Medina & A ; Nelson 2009 ) .

Sugar and confectionary gross revenues growing has been steadily increasing from 6.6 % in 1995 to 8.1 % in 2007 ( Euromonitor 2010 ) with cocoa confectionary basking 9 % growing, drawing in YTL 2 billion in 2009 ( Euromonitor 2009 ) . This growing came even after the monetary value increased demoing its resiliency to a lag in the economic system. ‘Outside of the European Union there were impressive gross revenues increases in the Philippines, UAE, South Africa, Turkey, Egypt and India ‘ ( The Press Trust of India Limited 2009 ) . Many of these listed states are easy accessed from Turkey and hence tapping into the market at a reduced cost than that of coming straight from Switerland.

Hazards

Turkey ‘s GDP is extremely influenced by the Global economic system its growing will co-occur with strong recovery and consumer assurance. This linked with investing will see the GDP grow strongly nevertheless if consumers remain unsure and investing diminutions, Turkey may happen it harder than other economic systems to retrieve ( OECD Economic Outlook 2010 ) . Turkey ‘s Gross National Income ( GNI ) per capita is comparatively low at US $ 8427 ( DFAT 2009 ) nevertheless this could be accounted for by its big population size ( Apayaydin 2009 ) and its big young person population ( Euromonitor 2010 ) . About 17 % of Turkey ‘s population falls below the poorness line ( CIA 2010 ) which means that about 1/5 of Turkey ‘s population will fight to pay for necessities and will non hold disposable income to pass on discretional points such as cocoa.

Although Turkey is considered to hold a low-priced labor work force available of over 25 million, it presently estimates 14.5 % to be unemployed ( CIA 2010 ) . It ‘s GINI index presently ranks it at 41 which is similar to its neighbouring states nevertheless unlike its neighbors it is going progressively better in its spread of income inequality dropping from 43.6 in 2003 ( CIA 2009 ) .

Recommendation

Turkey ‘s possible must non be ignored as it shows really powerful benefits of location, low costs and market size and with its pending association with the EU, market conditions are merely set to better as the authorities aims at doing itself more appealing for investors and to increase its portion on the universe market. George Friedman ( 2009, p.165 ) besides believes that Turkey ‘s possible market influence will travel beyond Asia, Europe and The Middle East and that ‘the American market, still immense, will be a big consumer of Nipponese and to a lesser extent, Turkish merchandises ‘ .

This statement made about the Swiss Chocolate market by Agence France Presse ( 2009 ) ‘with record gross revenues in 2008 for the back-to-back twelvemonth partially due to “ noteworthy ” inroads in India, South Africa, Turkey and UAE ‘ farther strengthens Turkey ‘s recommendation as being non merely a local market but tapping into its neighbouring states markets.