TURKEY - PESTLE Analysis

Furhan Shaikh

Introduction

Political
Economic
Social
Technological
Legal
Environmental

Explored on four
parameters
current
strengths,
current
challenges,
future prospects
future risks.

Exploring Turkey.

Exploring Turkey.
Turkey - strategically located in the Eurasia
region, dynamic country
robust economy
young population
In making of China of Europe.
99% Muslims
Secular state with a definite western perspective.
Christian and Jewish communitiesn mionrity in Istanbul,
Izmir and Adana.

 3% lies in Europe , 97% in Asia.

Key Member of NATO
Second biggest standing army in
Europe
And militiary power 9th in world.
Turkey is among the
world'sdeveloped countries and
fastest growinf economy.

 Ahmet Davutolu primeminister

from 2014
Recep Tayyip Erdoans Primeminster
2003 to 2014.
GDP per capita $15,300 US vs Indias
$4,000 US
Turkey inflation @ 7.91 % around
69.5% in 2001.

Political
Secular parliamentary representative democratic
republic,
Prime Minister of Turkey is the head of government,
Pluriform multi-party system.
Executive power is exercised by the government.
Legislative power is vested in both the government
and the Grand National Assembly of Turkey.
The Judiciary is independent of the executive and the
legislature.
Its current constitution was adopted on November 7,
1982 after a period of military rule, and enshrines the
principle of secularism.

Political landscape
The government of Turkey is based on the
principle of democratic representation, and
divides power between several ruling bodies.
Turkey has been pursuing a stable foreign
policy in recent years, and has played a
significant role in the formulation and
implementation of many global initiatives.
The current foreign policy of Turkey includes
assessing the national security implications
of the political turmoil in Iraq.

Political
Current Strengths
Government policies on
liberalization
Liberal trade and investment
policies with EU countries
Exports have increased at an
average of rate of 10% every
year
stabilized inflation rates

Future Prospects
Membership of the EU
This initiative has lead to the
government's continued
commitment to improve its
economic policies and economic
reforms
Increase its exports and draw
large capital inflows.

Current Challenges
Terrorist attacks
left-wing and Kurdish radicals /
Turkish militants with suspected
links to Al-Qaeda.
Increased security risks
hampering growth prospects
Rampant political and
bureaucratic corruption

Future Risks
Troubled relations with
neighbour Greece.
Rift between Turkey and US, over
Ankara's intention to send troops
Kurdish rebels in Iraq , could
hamper its relations and
investment climate.

Economic
Turkey's business environment and economic
competitiveness have improved over the years.
In 2007, the service sector was the major contributor to
the Turkish economy, constituting around 66% of GDP.
The industrial sector produced about 27% of GDP, with
the remainder coming from the agricultural sector.
The government has set an objective of reducing public
debt from approximately 40% of GDP to 30% of GDP by
2012. In addition, the government intends to increase
national savings, which would facilitate the reduction of
the current account deficit, public debt and borrowing
costs, and help curb inflation.

Economic
Current Strengths
High inflow of foreign
investment
$12.6 billion

Current Challenges
Current account deficit
$50 billion is decreasing.
crude prices dropped
relies heavily on European and
Middle Eastern export markets
Prudent fiscal and monetary and credit-fueled domestic
policies
demand to boost growth.
Inflation declined from 25.3% in
2003 to 7.55% in 2015
Future Prospects
Implementation of free
trade agreements

Future Risks
Rigid labor market .
difficulties faced by businesses in
hiring and firing workers
Uncompetitive economy.
Taxes are high
Exposed to external shocks.

Social
2.3 Social
The liveliness of the Turkish culture is so rich that it cannot be fit into a single
definition. It is influenced by the ancient history of Anatolia, the Mediterranean, the
Middle East, the Caucasus, Eastern Europe, and certainly by the Aegean culture.
Throughout history, Anatolia, like Istanbul, has hosted and produced many centers of
culture and the legacy of various civilizations attests to that fact. Today, this heritage
also determines the cultural life of Turkey. The culture of tolerance for all religions and
languages living together in peace, spread from Istanbul (which was the capital of
empires) to Anatolia. This tradition of tolerance is one of the most important
inheritances that Turkey can share with the world.
Hospitality
In addition to the existing social values of families living in a big city, the Turkish
people have retained some distinctive values of their own. One is an immense
courtesy towards guests and visitors and a tendency to lavish hospitality upon them,
no matter how costly. Another is an abiding respect for their family and its senior
members. Another Turkish value is a strong respect for hard work and determination.
And above all, there is a sense of humor and a love of life and music. One 19th
century English ambassador noticed that the people of Turkey loved to sing and dance
whenever they could. Many things have changed in Turkey since his time, but not that.

Social

Current Strengths
Growing percentage of
young population
opportunity to increase the
employment rate within the
country by capitalizing on its
young labor force.

Current Challenges
Low human development
index
Turkeys gender-related
development index (GDI)
value is 0.763.
Increasing infant mortality
Approx 3.7 %

Prudent fiscal and monetary

High level of unemployment
policies
Inflation declined from 25.3% in
highly regulated labor
2003 to 7.55% in 2015
market has led to high
employment costs
Future Prospects
Overhaul of social policies
initiated an IPARD in December
2007
aims to improve the social
conditions of people living in rural
areas
modernization of the agricultural

Future Risks
Ineffective social security
system
Retirement age is within 50.
Country's inadequate pension
system
Low rates of registration among
workers, and underreporting of

Technology

2.4 Technological
The Republic of Turkey has long been and continues to be an advocate of raising science and technology to new
heights, and has recently been engaged in a significant science, technology and innovation (STI) impetus. Such an
advocacy is rooted in the advancement of a dynamic ideal Project International Marketing Automotive Industry
Upcoming Opportunity in TURKEY Page 11
based on continuous renewal and modernization under the guidance of science, technology, and knowledge.
The Turkish model is all the more significant given that the low levels of public R&D funds, industrial R&D, and
demand for innovation alongside rising global competitive pressure on sectors with high exports were overcome by
the instigation of an STI impetus. With similar conjectures still being valid in many developing countries, the
Turkish model provides useful insight to address these challenges.
This policy brief is organized into three main sections, namely long-term visions, strategies and targets for STI
driven growth, major instruments in the STI policy mix, and achievements. With regards to the Turkish model, this
paper emphasizes the conceptualization of the Turkish Research Area (TARAL) in triggering a particular kind of
mobilization, both in the sense of resources and in guiding system actors towards socio-economic goals.
Vision 2023: Science and Technology Strategies
In an aspect of long-term visions and strategies for STI-driven, sustainable growth, Vision 2023: Science and
Technology Strategies sets forth the aim of creating an ever-more innovative society in 2023, which marks the
100th anniversary of the foundation of the Republic of Turkey. Together with three other projects that collected and
evaluated data on the STI capacity of the country, Vision 2023 included a technology foresight project. Based on
the Delphi method as a systemic, meta-instrument, the results produced over 90 technology activity fields of which
the main domains deemed most vital to secure the attainment of an STI-driven, welfare society are grouped under
core socio-economic goals: Project International Marketing Automotive Industry Upcoming Opportunity in TURKEY
Page 12
Establishment of the Turkish Research Area (TARAL)
Launched in 2004, one of the subsequent triggers in the Turkish model is the conceptualization of the Turkish
Research Area (TARAL). TARAL set into motion a mobilization with which the private and public sectors, together
with NGOs, strategically focus and collaborate on R&D and innovation. The TARAL objectives that are to be
achieved are to (a) enhance the quality of life, (b) find innovative solutions to societal needs, (c) increase the
competitiveness of the country, and (d) foster and diffuse S&T awareness in society. To make such a mobilization
possible, the TARAL targets were determined as bolstering (i) the share of R&D expenditures in Gross Domestic
Product (GDP), (ii) the demand for R&D, and (iii) the number of qualified R&D personnel. A critical stimulus was the

Technology

Current Strengths
Current Challenges
Significant development in
Low expenditure on R&D
the ICT sector
Double-digit growth in the ICT Erode the competitiveness
market
of industries
Current market size is 27 bllion
and growing at CAGR 23%.
Future Prospects
Government encouragement
to improve R&D
Initiated a project on science and
technology called Vision 2023 for
the period 200323
Prospects of joining the EU
reversing brain drain
As Speculation of Turkey joining
EU is gaining momentum , skilled
scientists who are returning to
Turkey

Future Risks
Lack of innovation and low
number of patents about
0.05% against other EU
countries.

Legal

2.5 Legal
In early 1995, Turkey's legal system consisted of three types of courts: judicial,
military, and administrative. Each system includes courts of first instance and
appellate courts. In addition, a Project International Marketing Automotive Industry
Upcoming Opportunity in TURKEY Page 13
Court of Jurisdictional Disputes rules on cases that cannot be classified readily as
falling within the purview of one court system.
The judicial courts form the largest part of the system; they handle most civil and
criminal cases involving ordinary citizens. The two supreme courts within the judicial
system are the Constitutional Court and the Court of Appeals.
The Constitutional Court reviews the constitutionality of laws and decrees at the
request of the president or of one-fifth of the members of the National Assembly. Its
decisions on the constitutionality of legislation and government decrees are final. The
eleven members of the Constitutional Court are appointed by the president from
among candidates nominated by lower courts and the High Council of Judges and
Public Prosecutors. Challenges to the constitutionality of a law must be made within
sixty days of its promulgation. Decisions of the Constitutional Court require the votes
of an absolute majority of all its members, with the exception of decisions to annul a
constitutional amendment, which require a two-thirds majority
2.6 Environmental
With the establishment of the Environment Ministry in 1991, Turkey began to make
significant progress addressing its most pressing environmental problems. The most
dramatic improvements were significant reductions of air pollution in Istanbul and

Legal

Current Strengths
Comprehensive legal
structure
Has the capability to address
various bottlenecks and structural
Robust framework for
business entities
Start , Operate and closing the
business much easier , at very
low cost

Current Challenges
Judicial inefficiencies
Political interference biased
judgements.
Process and decisions very slow.

Future Prospects
Reducion in tax rates
Lowest corporate tax rates
Online filing to reduce the time
for preparing trade
documentation intended to
draw FDI.
personal income tax also
reduced from 40% to 37%.

Future Risks
Existing loopholes in the
taxation system
Tax evasion is easy

Favorable laws for foreign

Environmental

Current Strengths
Rich biodiversity
rich natural resource base
and immense potential for
Ecotourism

Current Challenges
High pollution levels
Rise in air pollution, Water
pollution from neighboring
countries.
Soil Erosion

Future Prospects
Kyoto Protocol
Signatory to KYOTO Protocal Promotion and implementation of
the Clean Development
Mechanism (CDM)

Future Risks
Increasing levels of hazardous
waste
20% is disposed properly.
Rising emission levels may
faiil Turkey to be part of KYOTO
Protocol