Microeconomics Of The Republic Of Turkey Economics Essay

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Introduction

Turkey which is officially known as the Republic of Turkey is a Eurasian country. This has stretched across the Anatolian peninsula in the western areas of Asia and to Thrace in the Balkan region which lies in South-East Europe. It is amongst the 6 independent Turkic states. The migration of the people of the country to the place started back in the 7th century and eventually the Modern Republic of Turkey had been established in the year 1923 with Ataturk as its first President. Turkey is considered to be a democratic country which has secular, constitutional, republic and also an ancient cultural value attached to its name. In the recent past the country has been extending it relations with the west as it is now members with Council of Europe, NATO, OECD, OSCE and also G-20 countries. This has given the country a very largely stable shape as far as its economic conditions are concerned. The official language of the country is Turkish and some portion of the population also speaks languages like Kurdish and Zazaki. The country has also extended its middle-eastern relations by making agreements with countries in the Middle East, and other Turkic states of Central Asia and also other African countries. The country also has its membership with Organization of the Islamic Conference and also Economic Cooperation Organization. So, as per the strategic location of the nation, the vast stretches of land, its valiant army and strong and stable economy has classified it as a regional power. (Welcome to All About Turkey, 2010)

General Background

History

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As far as the land contained in the region bounded by what is today's Turkey is ages old, the settlement in the area is relatively new. The shifting to the present place started to take place in the 11th century. It was only after the powerful empire of Seljuq defeated the Byzantine Empire that Turchia was formed in Europe back in 12th century. There have been great wars fought for the coveted land called Turkey. The opponents have been the Mongols, habitants of North Africa, Central Europe or even the very recent rivals of the World Wars. But after the entire struggle, Turkey has had to give a very little proportion of its lands to the neighbours, rest it peacefully enjoys living in. (Turkey, 2006)

Geography

Turkey happens to be a transcontinental country which has its geographical portions divided between Europe and Asia though 97% of it comes under the latter. The total perimeter extends to 1600 km in length and 800 km in width. The three seas encircling the country are Aegean Sea, Black Sea and Mediterranean Sea. It forms borders with Greece and Bulgaria. Turkey is divided as per census in the following regions:

Marmara

Aegean

Black Sea

Central Anatolia

Eastern Anatolia

Southeast Anatolia

Mediterranean

Population

Turkey has a population of 73 million. It has about 3-4th of its population as urban. As per the census report of 2009, the country is believed to be progressing at a rate of 1.5% in its growth. The most highly populated cities of the country are Istanbul-the capital, Ankara, Izmir, Bursa and Adana. Much of the people are of Turkish ethnicity with Levantines and Kurds occupying minor portions as well.

Religion

The country does not have an official religion which qualifies it as a secular country but Islam dominates over the other religions in the locality. In 2006, the researchers identified 82% of the population as Sunni Hanafi, 9.1% as Sunni Shafi and anoher 5.7% as Alevi.

Culture

The country has a diversified culture consisting of Oguz Turkic, Anatolian, Ottoman and other western cultures as well. This has been a result of the mix between the Turks and those whom they were fighting to acquire the place. The music and literature of the place also has a mixed cultural influence which is a blend of the traditions followed in Turkey and other Islamic and European nations in the vicinity of the place. The literature also has a great influence of the Persians and the Arabs but the irony lies in the fact that 70% don't read books so much of the literature is very original.

Weather

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The coastal areas of the country have a Mediterranean climate which is characteristic of summers that are hot and dry and winters which are cool and wet. The areas that border the Black Sea have a oceanic climate which consists of warn and wet summers and cool and wet winters. Therefore the region is generally amongst those with a large degree of precipitation. The winter temperatures can drop to below 1 degree C and the summer temperatures can go to as high as 30 degree C.

Education

The education system that comprises the area goes back to the times of the Ataturk reforms which started to take place after the Turkish war of Independence. It has been worked out in a highly skilled and professional manner so that it could contribute to the social and economic benefits of the country. The country has made it mandatory to have 12 years of primary education, with three or four years of high school. There are facilities that range from public schooling, distance-learning and also vocational high schooling. It is highly bewildering to know that more than 95% of the students have been given the opportunity to attend schooling. This form of public schooling plays a large impact on the motivation that the middle class people have towards schooling.

As far as the enrolment rate is concerned, it is more shocking to know that the 2001 consensus report conveys that there was 100% enrolment for the children. As the conditions have only improved since then, it is likely that the percentage has not gone down. It is also a fact that there were about 1273 institutions which were under operations in the year 2001. There are two forms of educational facilities. They are Open Education Faculty and the National Entrance Faculty. The Open Education Faculty is more free but the latter is regulated by state examinations. Also, as the seat availability for graduates has been kept limited to 1.5 million, there is immense competition among the youth academically which only betters the learning environment of the Turkish high schools.

Also, if one talks about the amount that the Government spends in education and research in the area, it would be absolutely breathtaking to know that as much as 1.4 billion dollars is the country's budget for the same. This budget is passed in a procedural manner to the private and international funds through the National Ministry of finance. As far as research is concerned, the Scientific and Technological Research Council of Turkey has taken the responsibility to coordinate research and development in the area. This organization works on the proposed policies of Turkish Academy of Sciences. In all the country has 60 institutions for research and development. The areas that the research and development teams at these prestigious organizations have been enumerated as follows:

Forestry

Health

Biotechnology

Nuclear Technology

Minerals

Materials

Information Technology

Defence

As the country has very high religious values there are also some religious courses that it exclusively follows. They have been mentioned as follows:

De-establishment: This removed all the religious courses from the primary system of education in the year 1927 which was in lieu of the fact that there were also non-Muslims living in the country.

Re-establishment: But in 1956, it was incorporated again and at present, these religious take effect from the 4th grade of primary school and it continues till the secondary and the high schools.

Economy

As far as the GDP or the Gross Domestic Product of the country is concerned, Turkey has the distinction of holding the 15th largest GDP in the world. It is a privilege to report that Turkey is a founder member of OECD and also G-20 major economies. Between the years 1923 and 1983, the strict Government of the country followed a quasi-static approach in budget planning where limitations were imposed on participation in the private sector, foreign trade, foreign currency and also foreign direct investment which is better known in its abbreviated form FDI. But things changed in the year 1983, when a reform took place to change the idea of statist and also insulated system to a more private-sector and market-based model. As a result of this, there have been consistent growths in the country. But the recession periods of the years 1994 and also 1999, had played their role in holding the growth of the country's GDP as a whole. In fact they took the GDP growth rate to as low as 4% with high inflation rates as well. But after the economic crisis got over, it was in 2001, that things started to better again and today, inflation has once again fallen down to single digits and the degree of foreign investment has started to soar high.

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The following table shows the GDP trend of Turkey from 2000 to 2009: (Turkey GDP Report)

The control of the Government on foreign investment has decreased. There have been a number of privatisation policies in play. Also, the country has shown a large degree of liberalization in many sectors as a result of this. The GDP growth rate of the country has an average between 7-8% currently. As far as consumption of the country is concerned, it can be seen from the contribution of each of the sectors in the GDP of the country. The agricultural sector has made a contribution of 9%, while the industrial sector has a figure of 31%, services sector is at 59%. In spite of these figures where agriculture stays low at 9%, 27% of employment has been generated by agriculture. The country holds the honour of having 45% of the EU average of GDP in 2008.

The tourism sector has amongst those that grant huge revenues to the country. In fact the number went up to 22 billion dollars with about 31 million visitors in a calendar year. The other areas where Turkey has done fairly well to boost its economy are construction sector, banking sector, petrochemicals area, and food, steel, iron, automobile and mining. The country's automobile sector is amongst the very rapidly growing industries. It has the distinction of 6th largest producer in Europe and 15th largest producer in the world which also qualifies the country for a large degree of exports worldwide. With a total population of 78 million people and a total economy of 608 billion dollars, Turkey is the largest of those in CIVETS. This can also be supported by the fact that the ratio of public debt and GDP in the country has gone down tremendously below the 2002 levels to 46%. The country has been engaged in a customs union with the European Union which has given it the opportunity to make a considerable amount of increment in its industrial exports. This gives it a dual benefit as it also allows EU-origin foreign investment in the country. The country now has a free flow of trade with the European Union in spite of the fact that it doesn't have a full membership. This gives the country a chance to have a tariff-free sale throughout the market of European Union. In 2007 itself, the exports of the county had reached to a level of 115 billion dollars with the main export partners being Germany, UK, Italy, France, Spain and USA. But the reason to worry was the possible imbalance with a large degree of imports that went to around 205 billion dollars in the year 2008 where the exports were only 142 billion dollars.

On the whole the country has had very tough periods of struggle from times beyond. But what has kept the morale and as a result the growth considerably high is the fact that the Government has made necessary reforms as and when required. In 2007 itself, the expected amount drawn from foreign direct investments was 22 billion dollars and the growth rate that has been predicted shows that it is bound to reach even higher numbers in the future. There are a number of reasons for the same. One of them is that the country is undergoing a series of privatizations, which liberalizes trade across the borders of the country. Also, the country's stability is fostered by the fact that Turkey has undergone EU accession negotiations, made structural changes in its banking, retail and telecommunications sector. These together have done lots to increase the amount of foreign investments in Turkey.

As far as the financial market of Turkey is concerned, the country is solely dependent on the Istanbul Stock Exchange. This is the only stock or securities exchange of the country. The numbers of foreign participants in the Istanbul Stock Exchange (ISE) are huge in number, The country has been utilizing advancement in technology to great benefits in order to continue this boon to the financial health. The types of securities that are dealt at the ISE have been mentioned as follows:

Stocks

Bonds

Revenue-Sharing Certificates

Bills

Foreign Securities

The stock indices on ISE have been mentioned as follows:

ISE National 30 Index

ISE National 50 Index

ISE National 100 Index

ISE National All Shares Index

ISE Second National Market Index

ISE New Economy Market Index

ISE Investment Trusts Index

Finally, the most important fact about Turkey can be that the current budget of the country is TL 286.93 billion. The growth is expected to continue with the fairly disciplined fiscal policies of the country.

Conclusion

As we have seen, Turkey is among those nations that has built itself by making strong relations with the countries that extend from its western borders and going far beyond. It has also made agreements with the Eastern counterparts. The country's GDP is on an ever-increasing spree with inflation rates growing down tremendously. The country has also stuck to privatization which has been highly accountable for taking Turkey to the position that it currently holds. It is an example for those countries which are among the under-privileged but have the will and motivation to go far ahead. The best part of the country is that in spite of the fact that it has such a lot of foreign influence; the country has had stupendous success in maintaining the rich culture that it holds. In fact, the education system of the country is so strong and complete that it also incorporates its rich culture and heritage in the text books of primary school. The Government of the country has also aided Turkey by large numbers in terms of financial values to uplift the standard of education. This in turn has also bettered the financial strength of the country. It is because of the strong educational background that the people of the country have which has given them the abilities to make relations with the world and have such high degrees of foreign investment. Overall, Turkey has been following the right path to success in all aspects.