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1、 Country Analysis Report: Turkey Published 1/2012 Datamonitor. This brief is a licensed product and is not to be photocopied Page 1 OVERVIEW Catalyst This profile analyzes the political, economic, social, technological, legal, and environmental (PESTLE) structure in Turkey. Each of the PESTLE factor
2、s is explored in terms of four parameters: current strengths, current challenges, future prospects, and future risks. Summary Key findings Turkey has strong government effectiveness, but faces diplomatic rows with many countries Turkey is a strong proponent of liberal trade and investment policies.
3、It has an open trading system, especially with countries in the EU, with which it forged a customs union agreement in 1996. Furthermore, in April 2010 constitutional changes proposed by the government with the stated aim of making Turkey more democratic were discussed in parliament. In the World Ban
4、ks Worldwide Governance Indicators for 2010, the countrys best score was in the government effectiveness parameter with 66, reflecting the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and i
5、mplementation, and the credibility of the governments commitment to such policies. However, the countrys foreign policy as far as its neighbors are concerned is worrying, and tensions between Turkey and Iran, Syria, Israel, and Cyprus continue to grow. By agreeing to host North Atlantic Treaty Organ
6、ization missile defense radar installations on its territory as part of the European defense against Iranian missiles, Turkey has irked Iran. In response, Iran has threatened to target Turkish sites if it were to be attacked by the US or Israel. Meanwhile, Turkey is following a challenging foreign p
7、olicy with Syria, pressing Syrian President Bashar Assad to resign and imposing sanctions on the country. Turkeys support of the Syrian opposition, with the country having provided refuge to its leaders, is exacerbating the political turmoil in Syria. Relations with Israel have been strained since 2
8、010, after Israeli commandos killed nine Turkish activists following a raid on an aid flotilla heading to the Gaza Strip. The situation deteriorated further after Turkey expelled the Israeli ambassador in September 2011; in addition, the country has suspended military links with COUNTRY ANALYSIS REP
9、ORT Turkey In-depth PESTLE insights Publication Date: January 2012 Overview Country Analysis Report: Turkey Published 1/2012 Datamonitor. This brief is a licensed product and is not to be photocopied Page 2 Israel. Turkey also faces diplomatic tensions with Cyprus, after the Cypriot hydrocarbon expl
10、oration was resumed with Israeli co-operation in the Mediterranean Sea. Turkey has a strong banking sector, but a high current account deficit is impacting economic stability Turkey has a strong financial sector. The Turkish banking sector maintained a sound growth path in 2010. The total asset size
11、 of the banking sector increased around 12% to reach $625.6bn in 2010, compared to $536.9bn in 2009. The ratio of the banking sectors asset size to GDP increased from 83.7% in 2009 to 87.1% in 2010. In 2010, total loans stood at $330.9bn and total deposits were around $399.8bn. The banking sector ma
12、de a net profit of $13.9bn in 2010, compared to a net profit of $13.1bn in 2009. The countrys banking sector had a capital adequacy ratio of 19% in 2010, much higher than the mandatory limit of 8%. This indicates that Turkeys financial sector has not been affected by the global financial crisis. How
13、ever, Turkeys declining current account balance has hindered its economic stability. Turkeys current account balance has been facing an increasing deficit since 2002, with the exception of a decline in 2009. According to the central bank, Turkeys current account deficit was down by around 67% to $14
14、bn in 2009. However, the current account deficit rose more than 230% to reach $47.1bn in 2010. For the first 11 months of 2011, the current account deficit reached $65.1bn. The high current account deficit has been fueled and sustained by the domestic consumption of imported goods, high energy impor
15、ts, and the dependence of the export industry on imported intermediate goods and machinery. Since Turkey is an energy-dependent country, the cost of importing energy has a major bearing on the current account deficit, with the current account balance directly impacted by energy prices. The current a
16、ccount deficit makes Turkey susceptible during times of global financial uncertainty. Healthcare coverage in the country has improved, but inefficient services have led to high infant mortality Healthcare coverage is improving in the country. As of 2009, out-of-pocket expenditure on health had decli
17、ned by nearly 10% compared to 2000 figures, reflecting the rise of public healthcare services in the country. Per capita expenditure on health increased from $433 in 2000 to $902 in 2008, highlighting the significant increase in the allocation of funds to the Turkish people. Under the Health Transfo
18、rmation Program, 1,771 new healthcare facilities including 476 independent hospitals had been pressed into service as of September 2010. The family practitioner system that provides low cost healthcare through local doctors instead of high priced services at hospitals was implemented across the coun
19、trys 81 provinces in December 2010. To further improve healthcare coverage, which is currently at 80%, the government has assigned new staff to areas with a low density of doctors. However, the infant mortality rate is very high. In 2009, the infant mortality rate in the country was 26 per 1,000 liv
20、e births, compared to the OECD average of 4.4. In 2011, the total number of deaths per 1,000 live births was estimated at approximately 24; despite this decrease, Turkeys infant mortality rate remained the worst in Europe. The low number of physicians and nurses (among the lowest of any OECD nation)
21、, a lack of infection experts, and the insufficiency of several of Turkeys preventive and protective health services are the major causes. Turkey has a strong ICT sector, but faces challenges from high piracy levels The country has a strong ICT sector, with average growth of around 14% during 200210
22、. Turkeys ICT market reached a value of $28.5bn in 2010, up from $26bn in 2009. The number of Internet users in Turkey increased from approximately 10.6 million in 2004 to around 20 million in 2010. Under the governments Vision 2023 strategy, the country aims to reach 30 million broadband subscriber
23、s, supply 50% of the ICT sector with domestic products and services, increase the ICT Overview Country Analysis Report: Turkey Published 1/2012 Datamonitor. This brief is a licensed product and is not to be photocopied Page 3 sectors share to 8% of GDP, provide all public services electronically by
24、2019, and increase computer literacy to 80% of the population. However, intellectual property rights protection and enforcement is a cause for concern. In February 2011, the International Intellectual Property Alliance (IIPA) retained Turkey on its Watch List due to high levels of copyright piracy,
25、which placed it among the poor performers. According to IIPA estimates for 2010, piracy was highest in the business software industry, leading to a loss of $235m, and the percentage of business software in use made up of illegal copies was 62%. In 2009, during more than 3,600 raids carried out over
26、IPR 1.3 million pirated CDs and VCDs, 1.7 million pirated DVDs, and 1.9 million pirated books were seized. According to Entertainment Software Association vendors, in 2010 1.26 million connections participated in unauthorized file sharing on P2P networks through Internet service providers in Turkey.
27、 The country needs to safeguard its strong ICT sector by improving its anti-piracy legislation and enforcement. Turkey provides a robust business environment, but foreign direct investment restrictions in some sectors is a cause for concern Turkey provides a robust environment for business entities.
28、 It was ranked as the 67th freest economy by the Heritage Foundations and the Wall Street Journals Index of Economic Freedom 2011. In the World Banks Doing Business 2012 report, the country was ranked 71st out of 183 countries. Starting a business in Turkey takes an average of six days and six proce
29、dures, compared to the OECD average of 13 days and five procedures. As part of the reforms to attract businesses into the country, Turkey eliminated notarization fees for articles of association and other documents, and lowered the social security contribution rate for companies by offering a 5% reb
30、ate. The reasonably strong framework for business entities could drive business growth. However, some of the sectors in the country are inaccessible or only partially accessible to foreign investment. These sectors are the media, radio, and television broadcasting (only 25% foreign direct investment
31、 FDI allowed); petroleum (FDI subject to the Petroleum Law); passenger cargo air transportation and airport ground handling services (the majority of the shareholders have to be Turkish citizens); management of airports (FDI must be approved by the Turkish Armed Forces); transportation railways infr
32、astructure services (no FDI allowed); port management (FDI cannot exceed 49%); transportation in coastal waters and rivers (no FDI allowed); and yacht ports management (FDI must occur in partnership with Turkish citizens). The country needs to fully open its businesses for FDI, which will help in bu
33、siness expansion and employment generation. Turkey has strong environmental policies, but poor enforcement has led to high levels of pollution The country has strong environmental policies, and as part of its EU accession initiatives has been updating and modernizing its environmental laws. Local mu
34、nicipalities have important roles in recycling, waste sewage treatment, water purification, solid waste management, and environmental remediation. The countrys environmental policies emphasize energy efficiency, and the country has implemented most of the EU laws in this area. The Energy Efficiency
35、Law and the Law on Utilization of Renewable Energy Resources for generating electricity are targeted at promoting energy efficiency and the use of renewable energy. The country also has lower tax rates for natural gas, liquefied petroleum gas, and biodiesel. However, the country suffers from high po
36、llution levels due to poor enforcement of its environmental policies. The main reasons for high levels of environmental pollution in Turkey are the increase in chemical and detergent effluents and the rise in air pollution, particularly in urban areas. Air pollution has increased significantly in Tu
37、rkey since the mid-1990s, and is especially severe in Istanbul, Ankara, Erzurum, and Bursa. The volume of CO2 emissions increased from 206 million Overview Country Analysis Report: Turkey Published 1/2012 Datamonitor. This brief is a licensed product and is not to be photocopied Page 4 metric tons i
38、n 2003 to 268.7 million metric tons in 2010, while greenhouse gas emissions increased from 302.7 million metric tons in 2003 to 376 million metric tons in 2010. The energy sector has contributed significantly to the growth in emissions. The country needs to strengthen its environmental enforcement,
39、as high levels of pollution could harm the health of the people and the economy. PESTLE highlights Political landscape In the June 2011 parliamentary elections, the ruling Justice and Development Party (Adalet ve Kalkinma Partisi AKP) won the majority of the seats, and elected Prime Minister Recep T
40、ayyip Erdogan for a third term in office. This is expected to provide continuity to the countrys strong fiscal policies and structural reforms. Corruption is prevalent in the country. According to Transparency Internationals 2010 Corruption Perceptions Index, Turkey was ranked 56th out of 178 countr
41、ies. Economic landscape The resilience of the Turkish financial market and positive developments in the economy enabled the country to report growth of 9% in 2010. Datamonitor forecasts suggest that the economy will have grown 6.3% in 2011, before declining to average growth of around 5% in 201216.
42、Average annual growth in unemployment stood at around 5.9% during 200210, with the highest unemployment growth reported for 2009 at 27%. The unemployment rate was 11.9% in 2010. Social landscape In 2010, the countrys age structure showed that 26.9% of the population belonged to the 014 age group, an
43、d 66.9% of the population to the 1564 age group. The median age of the population was around 27 in 2010, which provides an opportunity to increase the employment rate in the country. According to the United Nations Development Programmes Human Development Report 2011, Turkeys Human Development Index
44、 was 0.699, and it was ranked 92nd out of 187 countries. The Gini coefficient (a measure of income disparity, with zero corresponding to complete equity and 100 to extreme inequity) was 39.7 for 200011. Technological landscape The government doubled the level of expenditure on research and developme
45、nt (R in addition, the country has suspended military links with Israel. Turkey also faces diplomatic tensions with Cyprus, after the Cypriot hydrocarbon exploration was resumed with Israeli co-operation in the Mediterranean Sea. Rampant corruption Turkey has a serious problem with regards to corrup
46、tion in its political and bureaucratic machinery. The 2010 Corruption Perceptions Index, published by anti-corruption organization Transparency International, ranked Turkey 56th out of 178 countries. According to both Transparency International and the World Bank, corruption at the institutional lev
47、el has traditionally been the cause of hesitancy among prospective investors. In 2007, several bureaucrats found to be involved in corrupt activities during various operations carried out by the police were sacked. In March 2010, the mayor of Adana was suspended by the Ministry of the Interior follo
48、wing allegations of corruption. In October 2010, 13 lawyers and two former members of the Supreme Court of Appeals were detained for suspected bribery. According to the Association of Certified Fraud Examiners, the average rate of fraud in Turkish organizations is 15%, compared to the world average
49、of 7%, which highlights the level of organizational corruption in the country. According to the 2011 Index of Economic Freedom, the country scored just 44 on freedom from corruption, reflecting the high levels of corruption in Turkey. The enforcement of laws against corruption is uneven, while the judicial system is viewed as susceptible to external influence. As a result of increasing corruption cases and a perceived lack of political commitment, Turkeys outlook in this area is bleak. PESTLE Analysis Country Analysis Repor