Turkey, The Field Of Dreams
Traci Sinclair on 12/16/2010 11:35:00 AM
“Build it, and they will come.” Kevin Costner is no economist as far as the Turks are concerned, but his cinematic advice has been polished a little so as to justify Turkey’s unofficial credo: “Build it right, and they will come back, again and again!” Working contrary to the flimsy, low-quality mass manufacturing models of China, India, Pakistan, and others, Turkey is bent on establishing itself as a producer, seller, and exporter of value-added, high quality manufacturing and production.
Turkey is Europe’s third-largest economy, and it is about to become the newest member of the European Union. Forecasts call for some nice growth. Things appear bright for this country that is a geographical cornerstone of Europe, Asia, and the Middle-East. One upshot of all this is that Turkey is on the verge of becoming such an important global hot-spot that it would not be surprising to see shares of Turkish companies on American exchanges sometime in the near future.
Driven by a policy of “reaching out,” Turkey has undertaken progressive measures to draw foreign investment to itself. In 2003, foreign direct investment laws were liberalized to offer the same benefits to outsiders that Turkish companies enjoy. Corporate tax was reduced from 33% to 20%. And in 2006, the Investment Support and Promotion Agency of Turkey was formed. The job of the government ISPAT is to promote activity and practices that will bring multinational companies to Turkey.
More than 1,100 U.S. companies operate in Turkey, with two-thirds having arrived in the past five years. During this period, the United States has invested in excess of $6.2 billion, making it Turkey’s second-largest investor. Part of the attraction to the U.S., as well as Europe, Asia, Russia, and some neighboring Middle-East countries, is Turkey’s economic stability and growth prospects. In 2009 GDP fell only slightly at 0.9% following the recessionary crisis, but is expected to climb to 6.1% for 2010. A drop to 3.6% is predicted for 2011, but then hiking to average growth of 6% to 7% between 2011 and 2017.
Globalization brings with it the inter-connectivity that allows everyone, large and small, across the planet to share in greater prosperity as long as this giant economic engine doesn’t get overheated. The rise of smaller, previously less important nations in Latin America, Asia, and elsewhere is beginning to show in terms of contributing to more developed economies, as well as their own. Investors should keep an eye on Turkey, as with others in this new crop of rising economies. The day may not be far off when we regularly see “Made in Turkey” attached to a greater number of products in the U.S.
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