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The University of Economics in Katowice/Poland

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Mobile telecommunications. E-business. Banking. Internet. What to invest in? Automotive ... Advisory Council Meeting in March 2004, Turkish Industrialists' and ... – PowerPoint PPT presentation

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Title: The University of Economics in Katowice/Poland


1
The University of Economics in Katowice/Poland
  • FOREIGN DIRECT INVESTMENTSin Turkey
  • FDI

2
The University of Economicsin Katowice/Poland
  • Part Two
  • FDI The Case of Turkey
  • Intensive Programe Seminar of teachers and
    students
  • 1st-13th May 2006 HONIM / Brussels

3
The University of Economicsin Katowice/Poland
  • Authors
  • Anna Brzeska
  • Anna Gandor
  • Edyta Tyc
  • Artur Barski
  • Slawomir Czech
  • Session led by PhD Joanna Czech-Rogosz

4
24th of January 1980
  • Opening to foreign markets
  • Export-led growth
  • Reducing the public sector
  • Privatization and liberalization
  • Development of banking and financial institutions

5
24th of January 1980
  • No currency restrictions
  • Free low of capital
  • Establishment of capital market and
    reorganization of Istanbul Stock Exchange
  • Encouraging investments

6
EU enlargement
2005 2015?
7
Accession features
  • Advanced integration
  • Demographic dynamism
  • Duality of economy
  • Migration threat

8
Economic freedom
Lassez faire!!!
9
GDP ratio
Very unstable growth
Only 30 of EU average
10
Low employment
Turkey 46
  • EU15 65
  • EU25 63
  • Poland 52

(Employed / work force population ratio)
11
Inflation
High inflation numbers in the late 90s Over 80
in 1998
12
Turkey FDI
Performance
HIGH LOW
HIGH Ireland, Poland, Hungary Greece, Egypt
LOW Turkey
Potential
13
Historical data
14
FDI ratios
  • FDI/GNP
  • Developing countries 28
  • African countries 21
  • FDI per capita
  • Developed countries 2245
  • World average 528

Turkey 92
Turkey 5
15
FDI breakdown
40
58
16
Foreign companies
70 EU
17
Investor is making decision
Safety of investment?
Where to invest?
What do they offer?
Possibility of high profits?
18
Competitive locations
Greece
East Europe
Russia
North Africa
19
What to invest in?
  • Mobile telecommunications
  • E-business
  • Banking
  • Internet

20
What to invest in?
  • Automotive
  • Electronics

21
Turkish gain on investments
  • Improved competitiveness
  • Research Development boost
  • Employment

22
TURKISH FDI DETERMINANTS
23
GENERAL
  • Huge domestic market (70 mln people)
  • Location at the crossroads between East and West
  • High labor force potential

24
STABILITY
  • Low political stability
  • Accomplishment of structural reforms
  • Improved resilience to shocks, reduced
    vulnerability
  • EU membership expected

25
GROWTH
  • High potential output
  • Structural reforms implemented
  • Privatization lags
  • Unstable historical growth

26
LEGAL SYSTEM
  • Business legislation not sufficient enough
  • Poor implementation of laws
  • Incompetent
  • bureaucracy

27
LEGAL SYSTEM
  • ctnd.
  • Frequent changes in legislation
  • Lack of political culture
  • Corruption and bribery
  • Unnecessary
  • sectoral licenses

28
TAXES
  • Increasing tax burden
  • Lack of viable tax system
  • Vast unregistered economy

29
INCENTIVES
  • Country promotion inadequate
  • Generous incentives for investors
  • No discrimination between foreign and domestic
    investors

I need information about Turkey!!!
30
LABOR
  • Good competitiveness
  • High skilled
  • Increasing labor costs
  • Large and low efficient agricultural sector

31
INTELLECTUAL PROPERTY RIGHTS
  • Crucial importance for development
  • IPR protection in place, but ineffective
  • EU standards missing

32
LAND
  • Shortage of appropriate land for investments
  • No space planning
  • Rehabilitation of Organized Industrial Zones
    needed

33
INFRASTRUCTURE
  • Poor transportation
  • infrastructure
  • Basic infrastructure insufficient
  • Low RD support
  • Monopolization of essential branches

34
Late improvements
  • FDI law enacted
  • Company establishment simplified

19 3
35
The Foreign Direct Investment Law of 2003
  • Freedom to invest
  • Freedom of profit transfers
  • Acquisition of real estates
  • International arbitration allowed
  • Employment of foreign staff

Its getting better!!
36
Major FDI obstacles
  • Poor legislation
  • Over-regulation
  • Bureaucracy
  • Slow pace of reforms
  • Political resistance

37
Investors institutional fears
  • Political interference
  • Weak justice system
  • Corruption
  • Poor implementation of IPR

38
Investors economic fears
  • Lack of economic stability
  • Chronic inflation
  • Exchange rate instability

39
Selected bibliography to the 2nd Part
  • Gros D., (2005) Economic aspects of Turkeys
    Quest for EU membership, CEPS Policy Brief no.
    69/2005.
  • Investment Environment and Foreign Direct
    Investments in Turkey, (2004) Working Paper for
    Investors Advisory Council Meeting in March 2004,
    Turkish Industrialists and Businessmens
    Association, Istanbul.
  • Loewendahl H. and Ertugal-Loewendahl E., (2001)
    Turkeys Performance in Attracting Foreign Direct
    Investment, Implications of EU Enlargement,
    European Network of Economic Policy Research
    Institutes Working Paper no. 8.

40
Thank you for your attention!!
  • Have a nice day!
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