Components of the Turkish Economy and Factors of Success
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02 Sep 2022

Components of the Turkish Economy and Factors of Success

Turkey has emerged as a major economic power in recent times, achieving records in the volume of exports worldwide. Turkey’s economy must have components and factors that led to its success, which we tackle in this article.

The Most Important Stages of the Turkish Economy

When the republican rule was established in the twenties of the last century, most of the national income was on agriculture, but currently, the Turkish economy features growth and development.

Turkey has directed economic growth and national output since 1963, adopting a series of successive plans. It aims to expand the role played by the private industrial sector in the national economy.

Thanks to government support, the number of factories increased from 118 in 1923 to more than 1,000, in 1941. Today, Turkey has more than 30,000 industrial facilities.

Agriculture has remained an important economic activity, employing 58% of the country's total workforce. The volume of agricultural production represents only approximately 20% of the volume of the value of goods and services produced in Turkey.

Industry absorbs only about 11% of the country's total labour force, but the revenues from industrial production outweigh the revenues from agricultural production.

Turkey has directed economic growth and national output through a series of successive plans since 1963, following an approach to expand the role of the private sector in the industrial field.

Political uncertainty in Turkey has had negative effects that have left the economy under the weight of domestic and foreign debt due to high inflation, large budget deficits, and high current account deficits.

Coalition governments have failed to address these problems, but after 2002 there was a new perspective on the economy (exports) referred to as the "new Turkey" in general.

The Turkish economy had gone through a series of setbacks and stumbling blocks, but its real renaissance began in 2002 and continues to the present day.

Major Trends and Transformations in the Turkish Economy

Turkey's political instability has had negative effects; it has left the economy under the weight of domestic and external debt due to increased inflation and a budget deficit.

Coalition governments failed to address these problems during the 1990s, but after 2002, there was a new perspective on the economy, known as the new Turkey.

At this stage, regular financial discipline and the shift in financial and business transactions became stable, with huge increased dependence on the private sector.

During this period, Turkey recovered quickly from previous negative effects, focused on increasing public institutions, avoiding falling into a debt trap, improving relations with international organizations, and achieving a steady growth rate.

Turkey is pursuing its full goals by the centenary of the founding of the republic.

Turkish Economy

The Main Sectors and Components of the Turkish Economy

The Turkish economy consists of key sectors and components in the industry, trade, agriculture, tourism, and others.

The state has the means of communication, railway lines, airports and relevant public facilities. The state also controls the steel industry, mining, forestry, most banking departments, and nearly 400,000 hectares of agricultural land, while the majority of farms, small factories and construction companies are owned by the private sector.

1. Industrial Sector in Turkey

Turkey is famous around the world as an industrial country of great importance in the industrial sector.

Turkey produces most of the basic and secondary goods, from foodstuffs to industrial machinery, building materials... and so on.

To attract foreign industrial investment, Turkey has established many industrial zones, about (346) zones, while about (35) new industrial zones are either about to be completed or have been developed as a construction plan to start their implementation soon.

Turkey took care of the infrastructure to allow factories and companies to operate productively within its territory, it modernized the water, electricity, gas, roads, internet and mobile networks.

The most interesting industrial sector in Turkey is the automotive industry, with Turkey ranking thirteenth globally as the largest automobile manufacturer in the world, and fifth in Europe.

Every year, Turkey achieves a record in the value of exports, and industrial production is the most important resource for the country, as Turkey has already started producing its national car with 100% local technology.

The clothing industry is a remarkable economic force in Turkey, where the value of exports has achieved high numbers.

At the military and armament levels, Turkey has made tremendous strides, moving it from the importer status to the manufacturing one, and then to the exporter. 

In technology, the number of centres of Turkish technology companies has increased from two in 2001 to more than 100 centres.

In the pharmaceutical sector, its exports have reached a record, with Turkey’s total value of medical tourism about five hundred billion dollars, and the medical sector looks to provide 20 billion dollars of revenues from this tourism by 2023.

Components of Turkish Economy

2. Tourism Sector in Turkey

Tourism in Turkey relies heavily on a variety of historic sites and coastal resorts on the Aegean and Mediterranean Seas. Turkey has become a destination for culture and medical tourism in recent years, ranking fourth globally with more than 30 million tourists.

The Ministry of Tourism has always launched marketing campaigns to increase the number of tourists in the country, which has seen an early return to its activities in the tourism sector after the period of the Corona pandemic.

It is worth noting that Turkey has been able to achieve a great boom in the tourism level during the last decade, and was able to break records in the number of foreign tourists before their numbers declined during the past year due to the Corona pandemic, which stopped the movement of many sectors around the world.

3. Agricultural Sector in Turkey

Containing the headwaters of the Tigris and Euphrates rivers, Turkey is one of the world's leading countries in the agricultural sector, which today reflects the prosperity enjoyed by the agriculture and food industries.

It has a geographical terrain and favourable climate, large arable land, and abundant sources of water supply.

Turkey is the seventh largest country in the world for overall agricultural production and is the world leader in the production of figs, hazelnuts, raisins and dried apricots. It is also one of the world's leading countries in the production of milk, dairy products and honey.

Turkey also saw production totals of 35.3 million tons of cereal crops, 30.3 million tons of vegetables, 18.9 million tons of fruits, 1.9 million tons of poultry and 1.2 million tons of red meat.

In addition, Turkey has an estimated 11,000 plant species, while the total number of plant species in Europe is 11,500.

Turkey offers significant investment opportunities in agribusiness subsectors such as fruit and vegetable processing, animal feed, livestock, poultry, dairy products, functional food, fisheries, and cofactors (particularly the distribution of the refrigeration and greenhouse chain, irrigation and fertilizers).

Turkey aims to be among the top five producing countries globally, as part of its planned targets for the agricultural sector by 2023. Turkey's vision for its centenary in 2023 includes other ambitious goals.

Sectors of Turkish Economy

4. Construction Sector in Turkey

In the last ten years, the Turkish real estate sector has witnessed a great boom after radical changes made by the Turkish government, according to which citizens of 183 countries are allowed to own real estate inside Turkey, to attract more foreign investors, which has been reflected in the sector itself, opening wide horizons for investment in Turkey.

Foreign investors flocked to Turkey following these measures to own real estate, taking a large share of purchases, and sales increased fivefold between 2012 and 2015.

The subjective factors related to the property contribute greatly to determining the success of the real estate investment and thus the price of the property, such as location, the quality of the materials, the luxury of finishing...

Certainly, the real estate sector in Turkey is also influenced by objective factors that go beyond the sector itself, in particular the infrastructure including roads and bridges, electrical networks and communications, and water and sewage resources, ...

Turkey has achieved a lot in projects of infrastructure such as Istanbul's third airport, the Istanbul Canal project, the Canakkale Bridge and Sultan Yavuz Selim Bridge (III), and many pioneering and important projects and investments in the construction sector, which is a great supporter of the Turkish economy.

5. Mining Sector

The mining sector in Turkey is one of the main sectors that provide the state's financial revenues; it enhances its reserves of precious metals, such as gold and silver, in addition to its role in supporting Turkish industries with industrial raw materials.

Turkey has sources of most minerals and is one of the most mineral-rich countries in the world, and Turkey produces many types of minerals and mineral deposits, due to the rich and diverse nature of Turkish geology.

Gold and silver are one of the most important precious metals in Turkey, and copper and chromium are one of the most important industrial metals, in addition to iron and steel, which vary in the fields of investment and manufacturing.

In recent years, production, mining activities, research and exploration operations in the mining sector in Turkey has increased significantly, especially concerning gold, silver, copper, chromium and manganese.

The production of basic mineral ores is dominated by the public sector, while the private sector focuses on the production of industrial metals.

6. Services Sector

The service sector is one of the most important modern economic trends given the share it has in the field of work, as well as its important contribution to total production.

This sector was neglected because it does not contribute to increasing income directly. After industrial development, the service sector grew very rapidly, and most economic sectors turned into service areas, and currently, it is considered the heart of the contemporary economy.

The contemporary economy has been assured of the need to develop this vital sector because of its positive impact on economic development, as any imbalance in this sector can lead to a deterioration in employment and investment rates.

Due to globalization and multinational corporations and competition in markets, the local market has become a magnet, prompting decision-makers to take measures that will liberalize and modernize the service sector to activate its role in advancing the development process.

Over the past few years, investment in Turkey's service sector has seen a high turnout by foreign investors.

7. Telecommunications Sector

In general, the information technology sector is one of the most vital sectors in Turkey, and the telecommunications market is one of the most important pillars of the Turkish economy along with other markets such as real estate, tourism and others.

With a local market and great potential, investment in Turkey's ICT sector is growing faster than the global average.

Most legal transactions in Turkey today are documented electronically, which means easy access to documents in many cases.

Some of the areas most invested in ICT in Turkey are:

5.G technology for smartphones and tablets, IT services, and cloud computing.

The Turkish technology market continues to grow significantly as the population continues to move towards technological modernization in many areas of their lives.

The broadband Internet market has reached 73.8 million users so far, and the fixed number of users is 13.4 million. XDSL is the main technology in Turkey, with 9.5 million users.

It is worth mentioning that the frequencies (GSM) in the Turkish market start from 800 and reach 2600 MHz, and Turkcell has the widest range in frequency variation.

Moreover, fibre optic solutions have registered access to markets, where companies are making investments in infrastructure. The institutions of the Turkish Research and Development Institute and the Ministry of Communications and Transport (TUBITAK) and BTK are leading the government's efforts for deep and information security.

The information security sector is expected to grow because ICT systems for companies and governments are a very sensitive and important area. So, the government increases expenditures on hardware and software to fight threats to public cybersecurity.

The Most Important Natural Resources Owned by Turkey

Turkey has a lot of natural resources that it uses for the benefit of the overall growth of the economy and the country's national product. The most important of these resources are:

  • Gold

Gold is widely mined in several parts of Turkey, making Turkey a major producer of gold. The Kisladag Mine, located in Usak, is the country's largest gold mine and is owned and operated by Canada-based Eldorado Gold Company.

  • Copper

Turkey has many copper mines, and the Rize mine is one of the largest copper mines in the country, with an estimated reserve of 20 million tons of crude. There is also a Murgul mine in Artvin, where reserves are estimated at 40 million tons of copper ore.

  • لاIron Ore

Turkey contains about 83 million tons of iron ore reserves, which are distributed throughout the country, especially in Anatolia, Erzincan, Malatya and Sivas.

Production levels have not changed much over the years due to insufficient reserves.

The Avnik mine is one of the largest reserves of iron ore in Turkey, located in the province of Bingol, with an estimated reserve of 105 million tons of iron ore.

Due to low levels of iron ore production, Turkey relies on imports, especially from Brazil, Russia, Sweden and Ukraine.

  • Coal

Turkey produces more coal than oil and gas, and coal is primarily used for power generation. The country produced about 1.5 million tons of solid coal, which accounts for about 40% of Turkey's total energy production.

The main solid coal deposits are concentrated in the Amasra and Zonguldag basins, on the Black Sea coast of north-western Turkey. The basin size is estimated at 1.3 billion tons of solid coal and is the only area in the country where solid coal is mined.

Future of Turkish Economy

Elements and Factors of Success of the Turkish Economy

Turkey has amazed the surrounding countries and the world with the economic success it has achieved in all fields and sectors according to successive new records. This success has had many factors, the most important of which are:

1- Internal and External Economic Development

Countries that seek to excel in one of the fields, try to address their weaknesses, and one of the most important things that have been worked on to find solutions in Turkey, to make the economic sector successful, is modernization and development.

The state decided to pay all its financial debts and established service facilities such as hospitals, schools and everything related to renaissance and development.

It has increased its relations with its neighbours and distant countries, opened the door to production and export, and was able to achieve a privileged position among the major producers and exporters around the world.

2- Political Stability

One of the important factors for any country in the success of its economic plan is political stability, and this was clear to everyone, which made investors turn to Turkey, and reassure them of their capital and success, and this is what achieved growth and economic prosperity.

3- Laws Encouraging Investment

The laws enacted by the state to encourage local and external investment have led to an increase in investors, increased development projects and raised the country per capita income and national product.

 

Edited by Tebadul International Trade

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