ECONOMY

Since the Republic of Turkey was founded on the social and economic heritage of the Ottoman Empire, it inherited a heavy burden of debts and an economic structure that had been based completely on agriculture.

Areas of economic value remained outside the border of the new Republic.

Economic policies were geared to spreading private ownership of land, appropriating land for landless farmers and migrants, protecting domestic production by customs policies and refraining from external borrowing.

New laws were also introduced and banks as well as financial institutions were founded.

Positive economic developments produced new policies including statism. Under the statist policies, the private sector was not excluded from the national economic scene but was supported.

Public corporations were also developed to handle general daily needs. These corporations were owned either partly or completely by the state and were called State Economic Enterprises (KIT in Turkish), and whilst being an autonomous body were for the public’s benefit.

Another problem for Turkey was World War II. Although Turkey did not take an active part in the war, a major part of the country’s natural resources were allocated to defense. This caused production to fall, external trade relations to be stopped and therefore new extraordinary measures had to be introduced. After World War II, a new capitalist system, which derived from America, was dominant in the world. During this period, America was giving credit to Western European countries. This played an important part in the reconstruction of their economies. Under this framework Truman’s Doctrine and the Marshal Plan (1947-1948) were developed to help the European countries against the Soviet threat. Turkey was one of the countries receiving aid and as a result became a member of the IMF (International Money Fund) and NATO (North Atlantic Treaty Organization).

During the years that followed, democratic improvements and radical changes made way for the introduction of a liberal economic system.

Demand for exported Turkish products, particularly agricultural, grew considerably during this period. The Korean War contributed to this demand.

During the second half of the 1950s the economy reached a stalemate.

According to the 1961 Constitution, economic planning became a legal requirement and as a result The State Planning Organization was established. Five-Year-Development Plans started to play an important role from 1963 onwards.

A package of economic stability measures which came to be known as the January 24 Decisions was introduced in 1980, when Suleyman Demirel was Prime Minister and Turgut Ozal was holding an important and leading position in The State Planning Organization. The main aims of the package concentrated on foreign trade and economic liberalization.

After the military coup of 1980 the Armed Forces recognized the January 24 Decisions. This was the point at which Turgut Ozal came onto the political scene as he had been responsible for designing the package. When Turgut Ozal became Prime Minister, he used many novel ideas in order to integrate Turkey with the rest of the World on an economic basis. The main achievement was the introduction of a free market economy. He represented liberal tendencies and often said, “you can never make rivers flow in the opposite direction”.

Following the same path from 1993 onwards, the Prime Minister Tansu Ciller tried to overcome the deficit in the budget by putting emphasis on the privatization of State Economic Enterprises in international markets, the prevention of inequality in the tax system and reducing the rate of inflation (70% a year).

In 1994 Turkey suddenly started to loose economic stability and the Ciller Government, through emergency measures, was forced to introduce another package of policies known as April 5 Decisions.

This new package required that extra taxes were collected from the rich, and non-profitable State Economic Enterprises were shut down.

In order to obtain international support, Turkey suggested that there are two types of Islamic countries. The first is traditional and fundamentalist while the second, of which Turkey is a leading member, is more modern in its outlook. If Turkey, for any reason, cannot succeed, it will mean victory for the fundamentalists which could be seen as an important threat for the Western world.

Turkey is an associate member of the European Union and has been applying for full membership since 1987. Numerous reasons and excuses have been used by the EU committees to postpone full membership, however, the first step towards the EU was taken with the Customs Union in January 1996.

Economic Daily Life

Standard of Living

The legal minimum salary is $400-420. The percentage of the population living below the national poverty line is around 16%. The average income for a 4-people family was calculated to be around 14,750 USD in 2012.

Since 2002 GDP per capita has tripled from 3,492 USD to 10,782 USD in 2013. According to Purchasing Power Parity (PPP) GNI per capita surpassed 18 thousand USD in 2012.

Some examples for life standards:

• Cell phone penetration rate in households: 93.7% (2013)
• Internet access rate in households: 49.1% (2013)
• Internet access rate in enterprises: 90.8% (2013)
• PC penetration rate in households: 30.5% (2013)
• Laptop penetration rate in households: 31.4% (2013)
• Digital camera penetration rate in households: 28.1% (2013)
• Printer penetration rate in households: 14.0% (2011)

Income Tax 25-40%

Unemployment Rate

In January 2014, unemployment rate was 10.1% and seasonally adjusted unemployment rate was 9.1%.  In 2013, unemployment rate was 9.7%.

Seasonally adjusted unemployment rate in Euro Area was 11.9% and 10.6% in (EU28) in February 2014. In terms of  unemployment ratio Turkey outperformed 14 EU countries according to this data.

After Russia, Germany, England and France, Turkey has the 5th largest labor force among the European countries. (2012, World Bank)

Institutions for Social Insurance

There are three big social security institutions established by the state, and all of these have been merged to give the same services.

• The Retirement Trust (Emekli Sandigi)
• The Social Insurance Board (Sosyal Sigortalar Kurumu)
• The Social Insurance Board for small businessmen, craftsmen and others (Bag-Kur)

There are also Private Insurance Companies.

Retirement

Women and men can retire after working between 7000 and 9000 working days, not before the age of 58 for women and 60 for men. Until 204, this age limit will be increased to 65.

Housing

Because the size of families has become smaller and urbanization problems have arisen, people have started to live in apartment blocks in the urban areas and in smaller houses in the rural areas. Generally apartments have 3 bedrooms with an average surface area of 100 m² / 120 yd². In larger cities apartments are more expensive to own with, the minimum price being about $50,000-100,000 USD. The average citizen cannot easily afford such a price even with the help of a mortgage. Renting is a possibility, or good fortune may mean inheriting an apartment.

The housing problem increased in the 1960s and the Mass Housing Fund was established in 1980. The fund gave credit to construction cooperatives and many people became the owners of their own apartments by forming these cooperatives.

Nearly half of the people living in big cities rent their flats rather than own them. The average rent is $500-750 a month. In smaller cities, flats are less expensive and more people own their houses or apartments. The proportion of people who rent their houses nationwide is 40%. Some of these people, who work for the state, live in apartments which belong to the state and they pay a very small amount of rent. There is also a large group of people who live in their relatives’ houses in which case they either do not pay rents or pay minimum amounts.

MAJOR INDUSTRIES

These include mining, the production of vehicles (cars, buses and trucks), cement, construction, lumber and petroleum products, iron and steel, cotton, textiles, leather goods, fertilizers, beer, wine and foodstuffs.

Turkey is one of the world’s leading shipbuilding nations.

MAJOR IMPORTS

These include petroleum products, chemicals, pharmaceuticals, plastics, iron and steel, vehicles, vehicle parts, machinery, mechanical appliances, precious stones, precious metals, minerals, optical and photographic appliances.

Total imports to Turkey are valued at about 251.7 billion US Dollars (2013).

MAJOR EXPORTS

These include iron and metals, machinery, vehicles, vehicle parts, boilers, mechanical appliances, precious stones, precious metals, minerals, plastic, chemicals, cement, ceramics, glass, cotton, textiles, leather, agricultural goods, tobacco, fruits, and foodstuffs.

Total exports from Turkey are valued at about 151.9 billion US Dollars (2013).

NATURAL RESOURCES

Turkey is believed to be rich in a wide variety of mineral deposits which are mostly governed by the state sector. Relatively few of these have been exploited on a large scale. This is due to a lack of domestic capital for exploration and exploitation, political pressure that has discouraged wide-scale investment from abroad, and inadequate processing facilities.

Agriculture and Farming

Agriculture accounts for less than 10% of the GNP, although it employs 25% of the national labor force.

Turkey’s total land

36%	agricultural land
30%	forests and brushwood
28%	grazing land
6%	swamps, river beds, rocks and water surfaces

Agricultural production is generally carried out by small family enterprises in Turkey. 5% of the farm land belongs to the large enterprises and 95% to smaller concerns.

77% of the cultivated land produces grain with wheat ranking as the first. Wheat is common all over the country except in the Black Sea Region. Barley ranks as second, corn is third. Corn requires humid weather conditions during summer time, so the Black Sea Region is very suitable for its growth.

Vegetables account for 62% of agricultural production. Lentils, chickpeas and beans are common. Broad beans and peas also grow in Turkey but on a smaller basis. Chickpeas grow in Central Anatolia, broad beans in western parts and lentils especially in Southeastern Anatolia. The growing of potatoes has recently increased.

Industrial vegetables such as cotton, flax, sesame seeds and opium poppies have been grown for a long time in Turkey, but since the industrial developments after World War I new industrial vegetables such as sugar beet, sunflower seed and tea have also been produced.

Tobacco is grown in the Aegean, Marmara and Black Sea Regions. Soybeans are grown in the Mediterranean. Many kinds of fruit are grown in most parts of the country.

In 2013, 22,050,000 tons of wheat, 7,900,000 tons of barley, 5,900,000 tons of corn, 1,523,000 tons of sunflower, 2,250,000 tons of cotton, 16,483,306 tons of sugar beets were grown in Turkey.

Turkey is the world’s largest producer of hazelnuts, cherries, figs, apricots, quinces and pomegranates; the second largest producer of watermelons, cucumbers and chickpeas; the third largest producer of tomatoes, eggplants, green peppers, lentils and pistachios; the fourth largest producer of onions and olives; the fifth largest producer of sugar beet; the sixth largest producer of tobacco, tea and apples; the seventh largest producer of cotton and barley; the eighth largest producer of almonds; the ninth largest producer of wheat, rye and grapefruit, and the tenth largest producer of lemons.

Animal Husbandry

Animal husbandry has considerable potential for Turkey. In parts of the country where agriculture and farming are limited, people make their living with animals, especially in Central, Eastern and Southeastern Anatolia. Generally, traditional techniques are used, and the results are not as satisfactory when compared to modern countries.

Fishing

Because Turkey is surrounded by different seas on three sides, and has numerous lakes and rivers there is a big seafood potential. Unfortunately, because of the primitive techniques that are used, production and consumption of seafood per person is below the world average.

Anchovy, small mackerel and bonito are the most common fish in Turkey. The major freshwater fish are carp and trout. Besides fish, mussels and shrimps are also abundant.

Overfishing and water pollution are two problems for Turkey.

Seafood Catches

87%	Black Sea
7%	Marmara Sea
4%	Aegean Sea
2%	Mediterranean Sea

Forestry and Plants

Large areas in the South, West and Northwest are covered by Mediterranean vegetation, consisting mainly of thick, scrubby underbrush in the lowlands and deciduous or coniferous forests at higher altitudes up to the timberline. The humid northern margins of the country are the most densely wooded regions of Turkey. On the eastern Black Sea coast there are subtropical forests. The Anatolian interior is a region of steppes. Forests of mostly oak and coniferous trees exist only on the elevated areas.

The forest areas comprise of 26% of the total area of Turkey.

Forests

58%	Irregular and infertile
39%	Real forest areas for production
1.5%	Nature reserves
1.5%	National parks (21 in total)

99.8% of the forests belong to the state. Much of the wood harvest is burned and used for energy. Forests in Turkey are very rich regarding plant types. As a country with different climates and different ecosystems, Turkey has a tremendously rich flora and fauna.

The number of species of flowers in Turkey is approximately 9,000, out of which 3,000 are endemic, whereas in Europe there are 11,500 species.

Animal Life

Increasing population, developing industries, larger residential areas and unregulated hunting have been causing the destruction of natural resources which has a negative effect on wildlife.

Throughout the country today there are 120 species of mammals, 439 birds, 130 reptiles and 345 fish. Many of these species are very rare.

Turkey is rich in wild animals, insects and game birds. Wolf, fox, wildcat, lynx, jackal, marten, hyena, bear, deer, gazelle, boar, mountain goat, snake, scorpion, spider, beaver are among the animals still found in secluded and wooded regions. Major game birds are partridge, wild goose, quail and bustard.

Indigenous animals found in Anatolia include shepherd dog from Kangal, White Cat of Van region, and Tiftik Kecisi (Angora goat) from Ankara (Angora). Bald Ibis (Geronticus eremita) from Birecik is extinct.

Mines

Turkey is not so rich in mining. The mines are divided into three categories: Metals, industrial raw materials and energy raw materials.

The main metals are copper, lead, zinc, mercury, iron, chrome, aluminum, gold and silver. Industrial raw materials include asbestos and phosphate. Energy raw materials are coals, uranium, oil and geothermal sources.

Energy Sources

(2012)
45.6%	petroleum (oil products)
28.4%	coal
16.9%	lignite
10.0%	wood
43.6%	natural gas
4.0%	hydraulic
3.9%	others

Electricity

Electricity consumption per capita: 1,079 kw (1993)

January-June 1995)
37.8%	hydraulic energy
62.2%	thermic energy

The Southeastern Anatolia (GAP) Project

GAP is the largest regional development project ever undertaken in Turkey. It is a multi-purpose and integrated development project comprising of 22 dams and 19 hydroelectric power plants on the Tigris and Euphrates rivers and their tributaries.

When completed, it is planned to irrigate over 1.7 million hectares / 4.2 million acres of land and produce 27 billion kilowatt / hours of electrical energy per year. The planned total irrigation area will cover 8.5 million hectares / 21 million acres of productive land.

GAP is not limited to energy production, irrigation and farming alone. It is obvious that the development in agriculture will affect all other sectors of the regional economy, industry, mining, transportation, education, health and communications. The population of the region is around 5 million today but it is growing day by day. With new investments a minimum of 2 million people will have new job opportunities in the area. The migration from the rural to urban districts will stop and it is hoped that people will start migrating back to this region again. With the opening of the Urfa tunnel in 1994, the construction of new factories in the private sector has already started.

The Ataturk Dam on the Euphrates is the biggest in Turkey and fifth in the world. It is at the core of the GAP project and is almost complete.

Crude Oil

(1992)
82%	Import
18%	Domestic production.

76% of the domestic production is by the state (TPAO) and the 24% is by Turkish or foreign private companies like Shell, Mobil or Ersan.

Nearly all the domestic production is concentrated in Southeast Anatolia: Batman and Adiyaman.

Crude oil is processed at five major refineries: Izmit, Aliaga (Izmir), ATAS (Mersin), OAR (Kirikkale) and Batman.

Tourism

According to the World Travel & Tourism Council, in 2012 travel and tourism made a total contribution of 10.9% to Turkish GDP and supported 8.3% of all jobs in the country.

The number of tourists coming to Turkey has been increasing rapidly in the last few years. There were more than 8 million in 1996. This figure means that Turkey has a share of 1.5% of the total number of tourists traveling throughout the world.

Most of the tourists coming to Turkey are from Germany and Russsia.

The number of Turkish tourists going abroad is about 2-3 million per year.

European Union

• 12 September 1963: Ankara Agrement
• 23 November 1970: The signing of the Additional Protocol
• 1 January 1973: Additional Protocol to come into force
• 14 April 1987: Turkey’s Application for Membership
• 6 March 1995: The Association Council Decision Establishing the Customs Union
• 10-11 December 1999: Recognition of the Candidate Status of Turkey at the Helsinki Summit
• 8 March 2001: The first Accession Partnership Document issued
• 17 December 2004: European Council decision to start Negotiations with Turkey in the Brussels Summit
• 3 October 2005: Start of the Negotiations between Turkey and the EU
• 20 October 2005: Start of the Screening Process
• 13 October 2006: End of the Screening Process