How do the following facts determine the financial health of Turkey? What does it mean to a business owner that is planning a joint venture with another company in Turkey?
Despite credit growth in recent years, government securities still constitute a sizeable share in banks' portfolios (about 30% of bank assets) and credits to the real sector represent only 25 percent of the GDP.
Turkey plans on structural reform. ?is critical to ensuring that the banking system is able to return to its core activity, i.e. acting as a financial intermediary between private investments and savings?
Following the crisis in 2001 and thanks to structural reforms since then, the Consumer Price Index (CPI) inflation declined to single-digit levels in 2004 and Turkish debt has become manageable and sustainable. In 2002, gross public debt to GDP ratio was over 90%, and today, it is under 60%. Thus, the debt burden on the whole economy has gradually lost its importance. In April 2001, the Central Bank granted independence with an amendment to the Law. The primary objective of the Bank is to achieve and maintain price stability. The exchange rate regime and the inflation rate targets were set by the Central Bank and the government together. The monetary policy to be implemented and the monetary policy instruments to be used in order to achieve and maintain price stability are determined on the discretion of the Central Bank. The Central Bank supports the growth and employment policies of the Government, provided that these policies are not in conflict with the objective of achieving and maintaining price stability.
The facts represent that over the last 5 years the Turkish economy has been one of the fastest-growing economies in the world today. The IMF (International Monetary Fund) ranks 18th in domestic product based on purchasing power parity and fifth amongst developing countries in Foreign Direct Investment.
The export volume has exceeded 100 billion and total trade volume in excess of a quarter trillion USD.
The financial sector consist of 46 private banks, however a majority are still state owned. The economy has moved from a cash economy to a credit economy, which leaves the credit sector as one that is doing very well and continue to see future growth in.
The government securities are 30% of bank assets while the credits to retail sector is 25% of the GDP. There is a strong focus on financial intermediary between the private savings and investments.
Since structural reform the CPI index has declined to single digit levels in 2004 and the Gross Public Debt is under 60%. The central bank approves the growth plan Turkey has developed.
Fact 1) Hurts Turkey and business owner because there is too much credit that is held in banks that cannot circulate as loans in the economy. This hurts business growth by making it harder for companies to borrow.
Fact 2) Helps Turkey and business owner because these reforms may alleviate the problems of Fact 1 above.
Fact 3) Helps Turkey and business owner because lower inflation helps contain costs with relatively lower prices and wages, making Turkey more competative in ...
Analyzing Turkish economy as it relates to a foreign partner in a joint venture
Analysis Market Research
Activity 1: Research Activity: Economic Outlook
You work at a company that manufactures low-cost computers and is currently considering entering India. Use the World Development Indicators (WDI) - the World Bank's premier data compilation of data on development - to gather information on this country. Prepare a short report focusing on the economic policy and external debt, education, and infrastructure of India as it applies to your company's product. Make sure you examine the trends India may have been experiencing over the past few years in your selected variables. Your report should be a maximum of 1 page, double-spaced, Word or PDF document. However, you can have unlimited number of exhibits that should be put in an Appendix in the same file.
• Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/
• Search Phrase: "World Development Indicators"
• Resource Name: World Bank: World Development Indicators globalEDGE™
• Category: "News & Periodicals: Publications"
• Website: http://data.worldbank.org/indicator
On the World Bank website, click on the "By Country" tab and select India. Then, go to the corresponding indicators.
Activity 2: Research Activity: Business Taxation
The top management of your company has requested information on the tax policies of Denmark. Using the Denmark business guide on Deloitte International Tax and Business Guides, a resource that provides information on the investment climate, operating conditions, and tax system of the major trading countries, prepare a short report summarizing your findings on Denmark's business taxation. Your report should be a maximum of 1 page, double-spaced, Word or PDF document. However, you can have unlimited number of exhibits that should be put in an Appendix in the same file.
• Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/
• Search Phrase: "Deloitte International Tax and Business Guides"
• Resource Name: "Deloitte International Tax and Business Guides"
• globalEDGE™ Category: "Research: Multi-Country"
• Website: http://www.deloitte.com/taxguides
On the website, go to the "Jurisdiction selector" and select Denmark. Once on the Denmark page, click on "Download the Guide". The information requested can be found in the "Business taxation" section of the guide.
Note: Cite all your work where possible
Activity 3: Research Activity: Hofstede's Dimensions
The cultural distance of countries in which your firm operates is one of the many explanations of significant differences that your U.S.-based employees face when travelling to different affiliates worldwide. Typically, an index of cultural distance can be determined by summing the squared differences of country-level scores such as those introduced by Hofstede's cultural dimensions and then taking the square root of the summation (this is called the Euclidean distance). At the present time, your firm has operations in Turkey, Poland, Costa Rica, South Africa, and Indonesia. Using the Hofstede Cultural Dimensions Resource Center based on studies involving cultural dimensions to assess all five countries, determine which affiliates are located in a culture that is least and most similar to the U.S. As there are four main components of each overall cultural distance score, which component(s) can be considered most influential for each country? Your report should be a maximum of 1 page, double-spaced, Word or PDF document. However, you can have unlimited number of exhibits that should be put in an Appendix in the same file.
• Go to: http://globaledge.msu.edu
• Search Phrase: "Hofstede Cultural Dimensions Resource Center"
• Resource Name: Geert Hofstede Cultural Dimensions Resource Center
• globalEDGE™ Category: "Reference: Culture"
• Website: http://geert-hofstede.com/countries.html
• Once on the website, select the corresponding countries
• Use this Excel file with rankings for all countries.
Activity 4: Research Activity: Trade Barriers and Corruption
You work at a pharmaceutical company that is considering entering India, Chile, Canada, China and Turkey. Conduct the appropriate level of research in a trade barriers database to identify information on India's current requirements (tariffs, duties, non-tariff barriers, investment-related barriers, and intellectual property rights). Also, the company is worrying about potential corruption. Using Transparency International's Corruption Perceptions Index (CPI) that is a comparative assessment of a country's integrity performance, find how the above countries rank. Further, identify the five countries with the lowest and the five with the highest CPI scores according to this index. Do you see any trends between CPI scores and the level of economic and social development of a country? Your report should be a maximum of 1 page, double-spaced, Word or PDF document. However, you can have unlimited number of exhibits that should be put in an Appendix in the same file.
Trade Barriers Database:
The quickest way to reach this information would be to search globalEDGE using the phrase "trade barriers database" at http://globaledge.msu.edu/. Select the Market Access Database website. Once there, select "Trade Barriers Database". Then under sector, select Pharmaceuticals; under country select all (e.g., highlight all countries or just the countries you need), and under measure select all. A series of reports are listed from which those with more general titles will provide adequate insight for the exercise.
Search Phrase: "Trade Barriers Database"
Resource Name: Market Access Database
Direct link to the Website: http://madb.europa.eu/mkaccdb2/indexPubli.htm
Corruption Perception Index
Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/
Search Phrase: "Corruption Perceptions Index"
Resource Name: Transparency International - Corruption Perceptions Index
globalEDGE™ Category: "Research: Rankings"
Direct link to the Website: http://www.transparency.org/research/cpi
Or for archival data: http://archive.transparency.org/policy_research/surveys_indices/cpi/