A Decade-Long Ascent to Economic Power
Senior Features Editor
Two of the agency’s focuses are the energy sector and transportation, both big items in the government’s privatization offering.
Energy is a growth industry in Turkey, which imports 70 percent of its energy needs, according to the Turkish EU Accession Delegation report. It is reliant on crude oil from the Mideast and Russia.
Because of that, the government is aggressively pursuing alternatives, including plans to build up to two dozen nuclear reactors and four power plants. A Russian consortium has already secured the contract for the first plant.
Given its large land mass and population, especially its middle class, Turkey’s demand for energy, like other goods and services, is growing quickly, say economists.
Among the market’s other enticements: Per capita GDP is $10,444 (double a decade ago); and there are 50 million Internet users and 65 million mobile phone subscribers in 2011, according to the prime minister’s Investment and Support Promotion Agency.
Demographics and a large number of small- and medium-sized businesses mean opportunities for joint ventures and consumer sales. Even the auto industry must still import a lot of parts, so there are “incentives for foreign companies to come in and fund low-level production,” said Birch.
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The auto sector, which is supported by 4,000 sub-industry companies, is already well-represented by the global giants: In addition to Honda, Hyundai, Renault,Toyota, and Ford Motor, General Motors, Nissan and Mazda operate there.
The U.S. currently ranks fourth in exports to Turkey; trade between the two countries hit a record $20 billion last year, according to government data.
U.S. foreign direct investment (FDI) is not as large as might be expected for a fellow member of NATO and OECD, and a country that saw Ford, General Electricand Pfizer first enter its market a half century ago.
FDI was a modest $1.4 billion in 2011, putting the U.S. squarely behind Germany, France and the Netherlands.
The reasons, say experts, are complex.
For one, the U.S. chose to focus on the bigger markets of China and India, both of which have active immigrant business communities in the United States.
“From the American perspective, Turkey was below the radar. We don’t invest a lot in the Middle East,” said Jack Goldstone, a professor at George Mason University. “I think it was a grave strategic error not to recognize Turkey as a geographic bridge, as a trade center.”
Secondly, many U.S. players saw uncertainty in the power struggle between the Erdo?an government and the once dominant military. “It’s always been a problem with Turkey: Which direction Turkey is heading,” said Jenkins of the Central Asia-Caucasus Institute. “They’re [companies] reluctant to come in, but once they did they made money.”
The investment trend appears to be changing.
The number of U.S. companies registered in Turkey increased by 50 percent to 1,200 in the past three years through 2011, according to the Turkish Industry and Business Association.
Amgen, Baxter International, Eaton, GE and Goldman Sachs have either announced or undertaken a major investment in in 2012. Chrysler and Caterpillar say they are considering it.
Though the Turkish economy is set for a slowdown in 2012-2013, according to the IMF, it’s expected to be the fastest-growing one in the OECD during the 2011-2017, with an average annual GDP growth rate of 6.7 percent.
“It is indeed a force to be reckoned with economically and geopolitically,” said George Mason's Goldstone. “Turkey has fabulous potential."