Transcript invest poland

The University of Economics
in Katowice/Poland
FOREIGN DIRECT
INVESTMENTS
in Turkey
FDI
The University of Economics
in Katowice/Poland
Part Two
FDI – The Case of Turkey
Intensive Programe Seminar of teachers and students
1st-13th May 2006 HONIM / Brussels
The University of Economics
in Katowice/Poland
Authors:
Anna Brzęska
Anna Gandor
Edyta Tyc
Artur Barski
Sławomir Czech
Session led by: PhD Joanna Czech-Rogosz
24th of January 1980
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Opening to foreign markets
Export-led growth
Reducing the public sector
Privatization and liberalization
Development of banking and financial
institutions
24th of January 1980
• No currency restrictions
• Free low of capital
• Establishment of capital market and
reorganization of Istanbul Stock
Exchange
• Encouraging investments
EU enlargement
2005
2015?
Accession features
•Advanced integration
•Demographic dynamism
•Duality of economy
•Migration threat
Economic freedom
Lassez
faire!!!
GDP ratio
Only 30%
of EU
average
Very
unstable
growth
Low employment
EU15 65%
EU25 63%
Poland 52%
Turkey 46%
(Employed / work force population ratio)
Inflation
High inflation
numbers in
the late 90s
Over 80% in
1998
Turkey & FDI
Performance
Potential
HIGH
LOW
HIGH
LOW
Ireland,
Poland,
Hungary
Greece,
Egypt
Turkey
Historical data
FDI ratios
FDI/GNP
Developing
countries 28%
FDI per capita
Developed
countries 2245$
African countries
21%
World average
528$
Turkey 5%
Turkey 92$
FDI breakdown
58%
40%
Foreign companies
70% EU
Investor is making decision
Where to
invest?
Safety of
investment
?
What do
they
offer?
Possibility
of high
profits?
Competitive locations
East
Europe
Greece
Russia
North Africa
What to invest in?
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Mobile telecommunications
E-business
Banking
Internet
What to invest in?
• Automotive
• Electronics
Turkish gain on investments
• Improved competitiveness
• Research & Development boost
• Employment
TURKISH FDI
DETERMINANTS
GENERAL
• Huge domestic market (70 mln
people)
• Location at the crossroads between
East and West
• High labor force potential
STABILITY
• Low political stability
• Accomplishment of structural
reforms
• Improved resilience to shocks,
reduced vulnerability
• EU membership expected
GROWTH
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High potential output
Structural reforms implemented
Privatization lags
Unstable historical growth
LEGAL SYSTEM
• Business legislation not sufficient
enough
• Poor implementation of laws
• Incompetent
bureaucracy
LEGAL SYSTEM
ctnd.
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Frequent changes in legislation
Lack of political culture
Corruption and bribery
Unnecessary
sectoral licenses
TAXES
• Increasing tax burden
• Lack of viable tax system
• Vast unregistered economy
INCENTIVES
• Country promotion inadequate
• Generous incentives for investors
• No discrimination between foreign
and domestic investors
I need information
about Turkey!!!
LABOR
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Good competitiveness
High skilled
Increasing labor costs
Large and low efficient agricultural
sector
INTELLECTUAL PROPERTY
RIGHTS
• Crucial importance for development
• IPR protection in place, but
ineffective
• EU standards missing
LAND
• Shortage of appropriate land for
investments
• No space planning
• Rehabilitation of
Organized Industrial
Zones needed
INFRASTRUCTURE
• Poor transportation
infrastructure
• Basic infrastructure insufficient
• Low R&D support
• Monopolization of essential branches
Late improvements
FDI law enacted
Company establishment simplified
19
3
The Foreign Direct
Investment Law of 2003
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Freedom to invest
Freedom of profit transfers
Acquisition of real estates
International arbitration allowed
Employment of foreign staff
It’s getting
better!!
Major FDI obstacles
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Poor legislation
Over-regulation
Bureaucracy
Slow pace of reforms
Political resistance
Investors’
institutional fears
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Political interference
Weak justice system
Corruption
Poor implementation of IPR
Investors’
economic fears
• Lack of economic stability
• Chronic inflation
• Exchange rate instability
Selected bibliography
to the 2nd Part
1.
2.
3.
Gros D., (2005) Economic aspects of Turkey’s 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
Businessmen’s Association, Istanbul.
Loewendahl H. and Ertugal-Loewendahl E., (2001) Turkey’s
Performance in Attracting Foreign Direct Investment,
Implications of EU Enlargement, European Network of
Economic Policy Research Institutes Working Paper no. 8.
Thank you for your
attention!!
Have a nice day!