Turkey - Economic analysis of the Turkey government's growth and job creation policies, investment climate and political risk.






TURKEY: Economic Policy Analysis

This site presents an analysis of the Turkish government's economic policies compared to a list of 35 economic policies as prepared by student Doga Akpinaroglu with the Mike P. McKeever Institute of Economic Policy Analysis (MIEPA). This study was written in May of 2018. To read the analyses scroll through this site. To learn more about the background policies, click here

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    This study presents a detailed study of the economic policies of Turkey, as written by Specialist Doga Akpinaroglu. The ratings herein are based on the following rating scale:


    5.0 Perfect Facilitation of Wealth Creation
    4.0 Midway between Perfect and Neutral
    3.0 Neutral Effect on Wealth Creation
    2.0 Midway between Neutral and Obstructionist
    1.0 Perfectly Obstructionist to Wealth Creation
    [Rating scale copyright Mike P. McKeever, 2018. Used herein with permission]

            1               1.0           3.0             15.0        20 %
            2               1.0           3.0             15.0        20
            3               1.0           3.0             15.0        20
            4               3.0           9.0             15.0        60
            5               4.5          13.5             15.0        90
            6               2.0           6.0             15.0        40
            7               2.5           7.5             15.0        50
            8               1.0           3.0             15.0        20
            9               2.0           6.0             15.0        40  
            10              4.5          13.5             15.0        90
            11              4.0          12.0             15.0        80
            12              2.0           4.0             10.0        40
            13              4.5           9.0             10.0        90
            14              1.0           2.0             10.0        20
            15              2.5           5.0             10.0        50
            16              3.0           6.0             10.0        60 
            17              1.5           3.0             10.0        30
            18              1.5           3.0             10.0        30
            19              1.0           2.0             10.0        20
            20              1.0           2.0             10.0        20
            21              3.5           7.0             10.0        70
            22              2.0           4.0             10.0        40
            23              1.5           3.0             10.0        30
            24              5.0          10.0             10.0       100
            25              1.5           3.0             10.0        30
            26              1.5           3.0             10.0        30
            27              1.0           2.0             10.0        20
            28              3.5           7.0             10.0        70
            29              2.2           2.2              5.0        44
            30              4.5           4.5              5.0        90
            31              1.5           1.5              5.0        30
            32              4.0           4.0              5.0        80
            33              5.0           5.0              5.0       100
            34              2.2           2.2              5.0        44
            35              4.5           4.5              5.0        90
       TOTAL               87.9          178.4           370.0        48.2%
                          =====          ======          =====        =====


    1. Freedom from Internal Control: 1.0

    While you are free to open up a business or be employed on your own discretion, that freedom is parameterized very narrowly compared to the Europe. You are not free to create a press organization and attack the president or any high government officials, you are not free to talk or act in ways that insult the president or any high government officials, talk or act in ways might lead to a walkout, talk or act in ways that might be constituted as unreligious or there will be consequences (1,2). The country was rated as not free in matters of political rights and civil liberties (3). Once perhaps it was a free country but that is no more.


    (1) https://en.wikipedia.org/wiki/Human_rights_in_Turkey

    (2) https://www.telegraph.co.uk/news/2018/01/16/turkey-no-longer-free-country-according-global-rights-report/

    (3) https://freedomhouse.org/report/freedom-world/2018/turkey

    2. Freedom of Speech: 1.0

    Turkey was ranked 155 out of 180 countries on the matter of freedom of press, and it was labeled as not free on this subject (1,2). Since the referendum of 2015, the president holds most of the power in Turkey, his powers include spontaneous and justified arresting, he has arrested a woman who “flipped the bird”, she was arrested and sentenced for 11 months in jail (3). Turkey has the most journalist in jail in the world, about 18 times more than china (4). Protests are shut down violently and any denigrating speech directed towards a high-end bureaucrat is a potential crime (4). Websites that contain violence, sex, sexual imagery, denigration of the president; most social media websites and certain news sites that are deemed ‘untruthful’ are banned in Turkey (5).


    (1) https://rsf.org/en/turkey

    (2) https://freedomhouse.org/report/freedom-press/freedom-press-2017

    (3) http://www.marmaragazetesi.com/erdogana-orta-parmak-yapan-kadina-hapis-cezasi-55965h.htm

    (4) https://nypost.com/2016/12/04/crushing-free-speech-in-turkey/

    (5) https://en.wikipedia.org/wiki/Censorship_in_Turkey

    3. Effective, Fair Police: 1.0

    Reliability of police services in Turkey, ranked 103 out of 140 countries in 2016 (1). Turkish police often use unnecessary violence and targets protestors (2). A protest in Turkey will be stopped by the police with the help of tear gas, water cannons, night sticks, rubber bullets and sometimes actual guns (2) (This was the case in Taksim walkouts, where a peaceful protest to protect a public park turned into a bloody clash). While the police don’t discriminate against ethnicities, they do discriminate depending on your wallet size, Turkish police is corrupt enough that a well-known, investigated gold smuggling and money laundering circle was let go and any charges were dismissed, not until the evidence was out of Turkey was he convicted (3).


    (1) http://reports.weforum.org/global-competitiveness-report-2015-2016/competitiveness-rankings/

    (2) https://www.rt.com/news/turkey-police-brutality-reports-148/

    (3) https://www.nytimes.com/2017/12/11/world/europe/turkey-trial-zarrab.html

    4. Private Property: 3.0

    Turkey has centralized government, existence of local private property laws that differ from the central law is non-existent in all domains, such as land ownership or copyright (1,3). That said, the enforcement and quality of these laws are arguable. Turkey was ranked as 31 out of 45 countries on this subject, under Bulgaria, Romania and Czech Republic and over Russia and Ukraine (2). This score compared to Europe, is low enough to say the laws and their enforcements are subpar.


    (1) https://en.wikipedia.org/wiki/Land_Ownership_in_Turkey

    (2) https://www.globalpropertyguide.com/Europe/Turkey/property-rights-index

    (3) https://www.export.gov/article?id=Turkey-Protection-of-Property-Rights

    5. Commercial Banks: 4.5

    Turkey has a sound commercial banking system; most money in the market is in the banks and banks give loans to business at affordable interests and have security policies (1). In 2016, average capital adequacy ratio of Turkish banks were 13.8%, where as big US banks such as Wells Fargo averaged around 10.4% (2,3). Provisions for bad loans is 76% and ratio of NPLs in 2016 was 3.3%, a historical low (2). In 2016, loan/debt ratio was 125%, a historical high. Overall Turkey has a strong banking system, 88.2% of the financial sector in Turkey is dominated by the banking industry with it making up 83.7% of the GDP in 2013 (4).


    (1) http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/FinancingABusiness.aspx

    (2) http://www.eiu.com/industry/article/54764589/turkey-banking-sector-risk/2016-10-21

    (3) https://www.forbes.com/sites/greatspeculations/2015/03/06/a-look-at-common-equity-tier-1-capital-ratios-for-the-largest-u-s-banks/#138d7e563fa2

    (4) https://en.wikipedia.org/wiki/List_of_banks_in_Turkey

    6.Communication Systems: 2.0

    In Turkey major communication systems are telephones, fax machines, Internet, TV, radio and, newspapers and magazines. Access to electricity in Turkey percentage is 88.1%, which all but newspapers services require for communications (1). Coastal Turkey is mostly covered by cell phone network providers where as there are large numbers of pockets inland that have no coverage (2). Access to internet in Turkey is 58.4% and Turkey ranks 95th out of 214 countries (3). 80.7% of the population have access to TV (4).






    7.Transportation: 2.5

    Turkey’s transportation and trade related infrastructure falls behind of all European countries as well as North America; Turkey has ranked 31st out of 160, behind South African Republic, Singapore and Israel (1). 12 out of 81 cities have metro, tram or light rail (2). 41.5% of all roads are paved. Roads on the small cities and towns are poorly constructed and require skills and awareness when driving (3). Boats and ferries are accessible and plenty.


    (1) https://lpi.worldbank.org/sites/default/files/International_LPI_from_2007_to_2016.xlsx

    (2) https://en.wikipedia.org/wiki/Transport_in_Turkey

    (3) https://www.smartertravel.com/2017/06/19/getting-around-turkey-transportation-tips/

    8.Education: 1.0

    In 2016, student percent in ages between 14-17 was 97.7%, with 15.0% being in primary school.

    In 2016, student percent in ages between 18-21 was 70.0% with 57.7% being in high school (graduation age for high school in Turkey is 17-18) and 7.7% being in junior high or under. In 2016, student percent in ages between 22-29 was 57.6% with 32.0% being in high school or lower (1). Turkey’s literacy percentile rank relative to Europe is 5%, gross enrollment percentile relative to Europe for primary school is 63%, middle school is 81%, high school is 8%, repetition and drop out percentile ranks relative to Europe are both 6% and lastly percentile percentage of children out of school relative to Europe for primary is 24% and secondary is 0% (2). Literacy by total population in Turkey is 87.4% (3). Only 40% of all schools in Turkey are connected to internet (3). In all assessments tests such as literary assessment tests with continuous texts, Turkey falls behind of USA by 8% in ranks. Unemployment in males with tertiary education is 9.5% and in females it’s 24.9%(3).





    9.Social Mobility: 2.0

    To be employed or promoted in Turkey, you have to know people and ask them for a favor (1). Istanbul, being the center of all industrial productivity in Turkey, most jobs tend to be around it and there are 15.03 million people in Istanbul (30% of all work force in Turkey is in Istanbul, unemployment rate in Istanbul I 15% and rising and, 53% of Istanbul’s workforce is employed, 2,3) There are cases of unqualified students entering into universities or qualified students being turned down, though these cases are usually self-reports (4).


    (1)http://kariyeryolculugu.com/blog/2007/12/13/ise-alimlar-tanidik-vasitasiyla-olur- torpilsiz-olmuyor-diyenlere/

    (2) https://www.reuters.com/article/turkey-economy- unemployment/turkish-unemployment-rate-seen-higher-than-10-percent-until-2019- programme-idUSL5N1CA1K1

    (3) https://en.wikipedia.org/wiki/Istanbul


    10.Share of all Jobs in Small Businesses: 4.5

    In Turkey 75% of all jobs are held by employees in SME’s in 2014 (1). In 2017 this number was 73.5% (2). While the number of employment in large enterprises is increasing, it is happening very slowly. SME’s make up 99% of all jobs in Turkey therefore, one can see why the percent employment of SME’s are so high but this percent is relatively high compared to Europe and is unhealthy to economy since big part of SME’s are small retailer business (2).




    11. Freedom from outside Control: 4.0

    In Turkey, the government is the sole authority when it comes to control and laws. So much so that Turkey is classified as not a free country (1). Government is sovereign and exercises the power of legislation and policing at its will, without apparent hint of outside interference (2). But, there are those who express the idea that foreign powers make most of the choices in government decisions (3). Either way, people of turkey are more under control of Turkish government than any other.





    12. Protection of Domestic Enterprises: 2.0

    There are bound and unbound tariffs in Turkey, agricultural products are tariffed at on average 49% and industrial goods are tariffed at 5.5% on average. The overall applied tariff for 2016 was 12.8%, which was increased that year due to requests by domestic producers (1,2). While this is true, turkey’s both exports and imports have been growing, last recorded in 2017 as follows: Exports 157.1 billion USD and imports 234.2 billion USD, and the trade deficit is growing (3).


    (1)https://www.wto.org/english/tratop_e/tpr_e/tp431_e.htm /



    13. Foreign Currency Transactions: 4.5

    In Turkey business transactions are made in the national currency, all around (1). While the government does enforce the national currency to be used as the single currency while doing transactions, business still accept foreign well-known currencies such as USD and Euro (2). To do government-based transactions and to establish a business you would need Turkish Lira (3).



    (2)Self experience

    (3)http://www.invest.gov.tr/en- US/investmentguide/investorsguide/Pages/EstablishingABusinessInTR.aspx

    14. Border Control: 1.0

    Turkey doesn’t have a strong border control, in the last 15 years, 800,000 illegal immigrants were caught in Europe borders – by Europeans – trying to immigrate from turkey to Europe – who were in Turkey illegally (1). Turkey is losing 20 billion dollars annually because of smuggling, smugglers are able to smuggle 2.5 million metric tons of petroleum, which makes up 20% of the total petroleum in the market (2). In the last 2 years Turkish government has lost potential 2.86 billion dollars from smuggled petroleum. Other potential loses from smuggling are: 40.435 billion cell phones in last 10 years costed between 4 billion dollars and 5.5 billion dollars, 25 thousand metric tons of cigarettes costs 2.5 billion dollars annually, 1 million metric tons of sugar costs 1.5 billion dollars annually and lastly 1 million farm animals costs 666 million dollars, in terms of potential tax (3).


    (1)https://www.al-monitor.com/pulse/fr/originals/2014/11/turkey-border-security- problem.html

    (2) https://www.yenisafak.com/politika/atodan-kacak-ekonomisi-raporu-9035


    15. Currency: 2.5

    Turkey has had a single national, government issued currency since 1923 (1). And, after 2005 there was a currency revaluation, that modernized the currency, by removing extra zeros that remained from old times (before this revaluation 100 Liras were expressed as 100,000,000. They had six extra zeros.) (2). Ever since currency of Turkey has been changing in shape and names, without a real value reassessment (3). Turkey’s currency also has been prone to chaotic swings in value with only pattern being an overall decline (4).






    16. Cultural, language homogeneity: 3.0

    In Turkey, 75% of the population is Turkish, who speak the national language, 19% is Kurdish who speak both Kurdish and Turkish and 6% is other minorities (1). The language is homogenous in most parts but the clash between ethnic groups, especially between Armenians, Alevi’s (A sect of Muslims) and Kurdish people (2). There are frequent problems and terrorism on both parts when it comes to the second biggest occupants, Kurdish people, but the biggest aggregators of violence is the Kurdish Worker Party, a terroristic organization (3).



    (2)https://onedio.com/haber/alevilere-yonelik-ayrimcilik-raporu-alevilere-nefretin-varligi- yadsinamaz--651985


    17. Political effectiveness: 1.5

    Terrorism has been a staple in eastern Turkey since 1970’s by the Kurdistan Workers Party, and has moved inland since, so much so that in 2016 in Istanbul and Ankara 198 people were killed from June to December, which includes the assassination of Anderi Karlov, Russian Ambassador, and over 400 people were injured (1,2). Seven cities in southeast of turkey has been advised against all travel and in one point were in military quarantine with curfew (3,4). Turkey doesn’t have a specific budget to fight terrorism but in the last 30 years it has spent 350 billion dollars (5). Natural disasters like earthquakes happen and Turkey has been rebuilding some cities that are in danger since 1999 but the cities that are far away from Istanbul, if struck by an earthquake, doesn’t get rebuild almost at all (6).



    (2) https://www.express.co.uk/news/world/748986/terrorism-in-Turkey-latest-past-terror-attacks- Istanbul-shooting-bombing-Ankara-attack

    (3) www.gov.uk/foreign-travel-advice/turkey

    (4)https://m.bianet.org/bianet/insan-haklari/170312-yedi-ilin-21-ilcesinde-196-gun-sokaga-cikma- yasagi

    (5) http://www.sozcu.com.tr/2017/gundem/terore-300-milyar-dolar-harcamak-zorunda- kaldik-2108317/

    (6) https://www.sabah.com.tr/yasam/2013/02/27/depremden-15-yil-sonra- vanin-hali

    18. Institutional stability: 1.5

    Turkey in 2017 held a referendum that transefered almost all legislative and judicial power to the president (1). Before this happened change in systems of education occurred almost annually and refendums were held to change the legislature nature of Turkey multiple times every year (2,3). The legislative process has changed dramatically since the transfer of power and so has the courts (1).


    (1) https://en.wikipedia.org/wiki/Turkish_constitutional_referendum,_2017


    (3) http://www.cumhuriyet.com.tr/haber/egitim/826062/Son_14_yilda_egitim_sistemindeki_degis iklikler.html

    19. Honest government: 1.0

    Turkish government is known to be corrupt among business people, they hold open auctions for jobs of a certain kind, say construction, and business give their prices and times. A business that the government already made underhanded deals with, proposes an unbeatable price and time, which then get the job and are paid more than they proposed. (1) Turkish government ranks 75 out of 176 countries and has lower than the average score for corruption (2). There is always a risk of bribes and “gifts” in order to get the job done, and it is expected that many officials are corrupt (3).

    Sources: (1)Relative's Experience



    20. Common Laws: 1.0

    In Turkey law applies to everyone who doesn’t have the power to buy their way out of it. Rich people can often cover up a scandal or find a scape goat who will go to prison instead of them (1). In 2014, students who failed to enter their dream school by taking the national exam, bought their way into said schools, bumping other students who earned to enter those schools out (2). About 10,000 students who earned to go to a privileged high school couldn’t because of this.

    There were many cases that got initially leaked out to the media and were shut down with haste by the government in which multiple people (34) abused a helpless girl of age 14 and were let go and the only one got punish was the chief of a police department (3). In turkey corruption is rampant and in almost every institution, public and private (1).




    (3)http://www.cumhuriyet.com.tr/haber/turkiye/44515/14_yasindaki_kiza_34_kisi_tecavuz_etti_ _bir_tek_polis_muduru_ceza_aldi_.html

    21. Central Bank: 3.5

    Turkey has a central bank named, Central Bank of the Republic of Turkey or CBRT for short. CBRT has 4 shareholders. Turkish treasury, national banks, banks and privileged companies, and Turkish commercial institutions. The CRBT determines the monetary policies to pursue without political influence, with freedom. Since 2002, CBRT has been targeting inflation and created policies in that direction but inflation has been getting worse, and recently Turkish lira hit a record low. (1,2,3)



    (2)https://www.reuters.com/article/turkey-economy-erdogan/update-1-turkeys-erdogan-takes-aim-at- central-bank-independence-idUSL8N1NN1PD


    22. Domestic Budget Management: 2.0

    Turkey government revenue in 2013 was 154.52 billion USD, spending was 159.73 USD (1,2). For 2014, tax revenue was 165.65 and spending was 174.81 billion USD. For 2015, tax revenue was 191.81 and spending was 199.31 billion USD. For 2016, tax revenue was 214.61 and spending was 230.14 billion USD. For 2017, tax revenue was 236.60 and spending was 259.69. The percent rates in order are as follows: -3.37%, -5.52%, -3.91%, -7.23% and -9.75% of tax revenues of respective years, these numbers have been increasing and will increase in the future, as Turkey has yet to develop industrially.


    (1)https://www.quandl.com/data/ODA/TUR_GGX-Turkey-General-Government-Total- Expenditure-USD-Billions


    23. Government Debt: 1.5

    Turkey’s external debt in 2/6/2018 is 231.170 billion USD and Turkey pays 17.197 billion USD interest annually (1). Compared to the GDP, it is 27.03% of the GDP. The annual service payment compared to GDP is 2.0% of the GDP annualy. (2)




    24. Economic Statistics: 5.0

    Most of the statistics and data research in Turkey are done within the UN regulations, more specifically Eurostat codes (1). There are 3rd party organizations, whom do their own research and publish them as well. Most of the newspapers, both foreign and local, uses official statistics and they agree with each other. And, so far independent observers and researchers have rated them as accurate. (2)




    25. Protection of Public Health and safety: 1.5

    Infant deaths in Turkey for 2016 was 14,164, at a rate of 10.7 for that year. Compared to USA it is doubled the rate and compared to UK it is almost tripled the rate. (1) Average life expectancy in Turkey is 69 years, in USA it is 77 and in UK it is 78 years (2). The total amount of tuberculosis incidence is estimated at 14,000 people for 2016, in UK it was 6,500 and in USA it was 10,000 (keep in mind Turkey has a population of 79.5 million). The TB death rates for Turkey was .63 per 100,000 population and Turkey has no national budget to fight the disease (In USA the rate was .16 per 100,000 population).(3,4,5) Turkey had a poisoning rate at 5% in 2014 and Turkey ranks 70 out of 190 countries in Health Systems. (6,7)




    (3)https://extranet.who.int/sree/Reports?op=Replet&name=%2FWHO_HQ_Reports%2FG2%2FPROD%2FE XT%2FTBCountryProfile&ISO2=US&LAN=EN&outtype=pdf

    (4)https://extranet.who.int/sree/Reports?op=Replet&name=%2FWHO_HQ_Reports%2FG2%2FPROD%2FE XT%2FTBCountryProfile&ISO2=GB&LAN=EN&outtype=pdf

    (5)https://extranet.who.int/sree/Reports?op=Replet&name=%2FWHO_HQ_Reports%2FG2%2FPROD%2FE XT%2FTBCountryProfile&ISO2=TR&LAN=EN&outtype=pdf


    (7)http://thepatientfactor.com/canadian-health-care-information/world-health-organizations-ranking-of- the-worlds-health-systems/

    26. High wage policies: 1.5

    In Turkey, hourly minimum wage is 3.02 USD (1), half the federal minimum wage and 1/3rd of the San Francisco minimum wage. The monthly minimum wage for a person working 40 hours a week is: 483.2 USD. The average rent in Istanbul is: 461.5 USD (2). Unionization is scarce and unemployment is 10.3%. (3)





    27. Environmental Protection: 1.0

    Turkey has a pollution problem, and a serious one at that. Turkey’s population is concentrated around the coast, mostly near the Mediterranean with exceptions where there is industrial production. That said where ever population is dense, is a part where air is harmfully polluted. While there are laws to regulate and punish those who pollute, they aren’t enough and aren’t enforced well. To the extent that Usak Airport – a city airport – is classified as having hazardous air pollution. (1)

    In Turkey there are 19 water treatment plants, where as in California alone there are 900 plants (2,3). And, of these 19 plants only 1 of them does more than 80% of the cleansing. These 19 facilities clean 50% of the industrial waste, the other 50% are cleaned by private corporations. The polluted water amount in 2017 was, 4.5-billion-meter cubes, and with a quick calculation (by multiplying the maximum amount of water that can be cleaned daily with days in a year and multiplying that by 2 to account for private treatment companies) we can figure out that, Turkey can clean 558.9 million cubic meters of polluted water per year, that is roughly 1/8th of the total polluted amount in 2017. (4)

    In addition to these, wildfires are common place in Turkey. In the last ten years, from 2006 to 2017, there were 24,264 wildfires. (5)







    28. Strong Army: 3.5

    Turkey has the 14th largest army worldwide and 2nd largest army in NATO. Turkey not only utilizes active personnel, it also utilizes military reserves and conscription. Turkey put 1.7% of the GDP towards the army, for comparison USA puts 3.8%. It has 512,000 active personnel and 21,079,077 people available for military service (1,3). Turkey has considerable number of weapons and weaponized carriers (such as fighter jets and submarines), and a large reserve of petroleum. (2)

    Two problems Turkish army faces are: Core of the army, the ground troops aren’t well cared for and there is terrorism on eastern Turkey. While these problems make the army suffer, they don’t weaken it considerably. I will also note that, there was a coup attempt last year; A failed coup is still damaging to the army. (4,5,6)








    29. Foreign Trade Impact: 2.2

    Turkey’s last year imports plus exports totaled at: 391.3 billion USD (1). Its GDP was 857.7 billion USD (2) for the same year. If we divide GDP by the total of foreign trade, we will see that it is about half or 45.6% to be precise.

    That is 40% more than 1/3 of the optimal amount (33%), from this I infer that Turkey’s economy depends on foreign trade at a considerable amount.




    30. Management of foreign currency budget: 4.5

    Turkey had a GDP of 857.7 billion USD in 2017 (1) and a trade deficit of 6.11 billion dollars (2).

    Last year’s import totaled at: 234.2 billion USD. Last years exports totaled at: 157.1 billion USD. If we take the difference and compare it to GDP, we get: -8.9%. While it is higher than -10%, it is still extremely close.




    31. Layers of Collective Action: 1.5

    Turkey has elected school boards, elected student boards, city and town councils, volunteer groups and civil health and education institutions but money allocated to most of these institutions by the government is almost non-existent for example; PETA, a nonprofit volunteer group receives no money whatsoever from the government in Turkey. This is the case with most volunteer groups, therefore, they become politicized to get money from big name bureaucrats or lobbyists. Most of these organizations are hierarchical in their internal roles and they eventually end up as useless. When it comes to the Student and School boards this is a little different in that, they are funded by the government, but they have no administrative power. (1,2)

    City and town halls do exist, when there is trouble quite a bit of people go to them but the process of solving problems in these institutions are rigorous and arduous. While they can solve problems, and have legislative power to do so, people who do have the power are mostly driven by personal gain and progression of their career. (It should be noted that activism and walkouts are common things in Turkey and they accomplish very little, people in general aren’t very happy with the way they are governed, in the context of now.) (3) (It also should be noted that these institutions aren’t entirely useless and has basic uses, for example, issuing new IDs or changing ones name.)

    Sources: (1)http://mevzuat.meb.gov.tr/html/2564_0.html


    32. Pro-Business Climate: 4.0

    In Turkey, there is a visible class distinction between businessman and the most people. Entrepreneurs are looked upon as hardworking and some are exalted daily. (1) Businessman enjoy high status and the riches it brings. There is a slight problem, that is the political climate. While most businessman are not subject to damage from it, especially big ones are. Educating one’s self and taking risks are venerated values in Turkish society. Also, it is said that businessman are members of a higher class, and it is fantasized in movies and TV series, what great life they live. (2)

    Also I grew up with and near businessmen, who enjoyed their time and their social stature quite a bit. A very distinct childhood memory was a gathering of such people in a lively convention, and after said convention a delightful meal in a prestigious restaurant. Everyone in the restaurant were dressed in sharp suits or elegant dresses, it seemed to like, right out of a movie. (3)


    (1)Personal Experience


    (3) Family friends and close relatives

    Personal experience

    33. Government Enterprises: 5.0

    Turkey has a highly privatized business scene, almost no companies are government owned, and the few that are owned by government, have shareholders; they hold, in most cases more than 30% cumulative. (1) (A list of government owned enterprises can be found here, 2)

    The Turkish government pays subsidies to companies in few different ways, the most prominent way is subsidizing crops. The government, in 2016, chose 16 plant types and paid money to those who grew them, thus helping the market. (3)/(4) An example of a less common way is by giving money to nonprofits, who supplies need based help. (It should be noted that, government subsidy programs in Turkey are almost always agricultural or unprocessed resource based)






    34. International Security Agreements: 2.2

    Turkey is a part of many security agreements, most notable ones being: SEDM, NATO, KFOR, ISAF and NTM-I/ Iraq training mission. (1) As mentioned above Turkey is an active member of NATO with 920,473 soldiers active and 1,349,473 on total. (3) Turkey has the 8th most powerful army, just under Germany, (2) and has plethora of military agreements with US. US has military bases in Turkey on multiple cities and both countries help each other on security issues. (4) (It should be noted that, this is only true for certain parts of Turkey hence the 4.5 score, there are 6 cities in turkey where entrance is highly dangerous and there are overall terroristic movements on most cities – mostly the border cities – but these aren’t a big enough of a factor to damage business formation.)

    That said, Turkey’s security agreements depend on NATO, and Turkey and NATO are on hot water at the moment. Turkey recently made an arms agreement with Russia (on buying an air space defense system) that put Turkey on a target board practically when it comes to NATO and European countries, and on a recent mission, the NATO committee disgraced the current president by putting him as an enemy to countries founding father and first president Ataturk. Enraged by this, the president and international relationship department put very aggressive notices forward. NATO and Turkey had a fleeting relationship before this event and this shook the foundation of the treaty quite a bit. (5,6)








    35. Protection of domestic enterprises from government mandated costs: 4.5

    The taxation rate for corporations in Turkey is 20%(2), it is below the world average and the European average. Depending on the type of company one would open, the regulations and rules differ, from easies to hardest to open is as follows: Corporations (Anonymously owned companies), Limited Liability Company (The biggest difference between LLC. and corporations is, owners and partners of LLC. are responsible for all the debt the company may have; on corporations the responsibility of debt lies on the financial board of the company. Corporations require larger financial capital to start up – 50,000 TL compared to 10,000 for LLC. – but for two years, the money gained from share transfer is tax exempt and share transfer action doesn’t need notary seal or fees.) and personally owned companies – owner as the sole proprietor - (There are no standard tax rates for these companies, it goes up depending on how much they make and can be as high as 35%, and a lot of regulations; most businesses eschew from this option.)(4) Turkey has VAT but there are also a lot of exemptions, that incentivize producer to keep producing taxed products, and of course buyers to keep demanding and buying. The standard rate is 18%, the basic foodstuff have a reduced rate of 8% and newspapers and journals 1%. Turkey also imposes tariffs on imported goods. The industrial goods get “Customs Union Common External Tariff” applied and nonagricultural products have Most-Favored Nation tariff apply to them at on average 5%. That said these are unbound rates and they can go as high as 17.4% but not any lower (3). Minimum wage in Turkey is enforced but at a very low rate, at about 2.6 usd/hour for someone who works 6 hours daily(1).







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