Contents

Introduction Measuring Competitiveness Measuring Turkey’s Competitiveness Sub-index 1: Basic Requirements Institutions Infrastructure Macroeconomy Health and Primary Education Sub-index 2: Efficiency Enhancers Higher Education and Training Market Efficiency Technological Readiness Innovation and Sophistication Factors Business Sophistication Innovation Conclusions References Footnotes Appendix

4 5 7 10 10 11 11 12 13 13 13 14 16 16 17 18 18 19 20

Turkey’s Competitiveness in a European Context © 2006 World Economic Forum

3

Introduction

Over the past half-decade, Turkey has been undergoing a process of deep economic and political reform. This process was triggered by the major economic crisis in 2001 (which led to an almost 8% contraction of GDP) and the acceleration of the convergence process with the European Union (EU) following Turkey’s designation as a candidate country in 1999 and the official opening of accession talks in 2005. The tight fiscal and monetary policies adopted in the aftermath of the 2001 economic collapse significantly curbed inflation to single digit figures in the 2002-2005 period and the economy quickly rebounded, with GDP growth rates as high as 7%. Meanwhile, the wave of economic and political reforms to meet the Copenhagen criteria set the basis for a more market-friendly economy and reinforced the democratic fundamentals of Turkish society by substantially reducing the military’s role in politics, adopting a new, more liberal penal code in 2005 and improving the rights of women and minorities. These achievements highlight the pace of Turkey’s modernization and demonstrate the increasing readiness of the country to progress to a more advanced stage of development. However, a number of troubling elements of economic and political vulnerability have yet to be addressed, namely, large macroeconomic imbalances and the still rather wide gap with international standards on human rights, freedom of expression, minority rights and judicial independence. These concerns, combined with the sheer size of Turkey’s population (71 million, projected to increase to 80-85 million by 2020), its relatively low GDP per capita (by EU standards), the continuing importance of agriculture in the economy, cultural differences and the extent of institutional reforms yet to be carried out, make it easy to understand the extraordinary challenges that the EU – and Turkey alike – face along the integration process. This state of affairs, combined with geopolitical disagreements (most particularly over Cyprus), might explain the rather ideological tone assumed from time to time in European national debates on Turkey’s accession as compared to the recent enlargement in 2004 and the accession of Bulgaria and Romania scheduled

for January 2007. In this respect, among EU countries, it sometimes seems as if speculative fears and suspicions have prevailed over a judicious assessment of the actual economic, social and political implications of a fully “European” Turkey. European suspicion has, in turn, generated a backlash among many Turkish citizens, who have grown increasingly impatient with the pace and requirements of the adhesion process. Against such a background, this paper attempts to provide a set of basic facts on the current state of Turkey’s economic competitiveness. Using the World Economic Forum’s methodological framework of the Global Competitiveness Index, we identify Turkey’s main competitive strengths and weaknesses and highlight the areas on which the country should focus in order to achieve sustainable growth and enduring prosperity for its citizens. Comparisons with EU member, accession and candidate countries will further provide an idea of Turkey’s economic preparedness to move to a more advanced stage of development and to join the EU on a mutually beneficial basis.

4

Turkey’s Competitiveness in a European Context © 2006 World Economic Forum

In order to assess national competitiveness. quality of schools) for which no hard data exist. Innovation Source: The Global Competitiveness Report 2006-2007 Key for EFFICIENCY-DRIVEN economies Key for INNOVATION-DRIVEN economies Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 5 . confidence in the public sector. financial). Infrastructure 3.2 Another important characteristic of the GCI is that it explicitly takes into account the fact that countries around the world are at different levels of economic development. corruption. business sophistication and innovation.and microeconomic drivers of productivity across a large number of countries. Internet penetration and school enrolment rates) and data from the World Economic Forum’s Executive Opinion Survey. Each of these pillars plays a critical role in driving national competitiveness. higher education and training. what presently drives productivity improvements in the United States is different from what drives them in Turkey.1 The measurement of competitiveness represents a complex undertaking. The Survey provides crucial data on a number of qualitative issues (e. policy-makers. efficiency-driven and innovation-driven. market efficiency (goods. one cannot simply pinpoint one or two areas as being critical for growth and prosperity. Figure 1. we use the Global Competitiveness Index (GCI). The Nine Pillars of Competitiveness technological readiness. These are identified as: institutions. BASIC REQUIREMENTS 1. labour. which is conducted annually among top executives in all of the countries assessed. the macroeconomy. The nine pillars are measured using both hard data from public sources (such as inflation. infrastructure. The GCI is the most comprehensive competitiveness index to date. economic development progresses in stages. In other words. Business Sophistication 9. Market Efficency (goods. Institutions 2. the GCI separates countries into three specific stages: factor-driven. labour. By highlighting the strengths and weaknesses of an economy. measuring both the macro. the GCI. In this light. For example. business leaders and other stakeholders are offered an important tool for the formulation of improved economic policies and institutional reforms. captures the idea that many different elements affect competitiveness. Higer Education and Training 6. which measures the set of institutions. Thus. Technological Readiness INNOVATION & SOPHISTICATION FACTORS 8. Health and Primary Education Key for FACTOR-DRIVEN economies EFFICIENCY ENHANCERS 5. Macroeconomy 4. What is important for improving the competitiveness of a country at a particular stage of development will not necessarily be the same for a country in another stage. health and primary education.Measuring Competitiveness The goal of the World Economic Forum’s work on competitiveness is to contribute to a better understanding of the key ingredients of economic growth and prosperity.g. with its nine distinct pillars. policies and factors that set the sustainable current and medium-term levels of economic prosperity. financial) 7.

They sell commodities or simple products. countries can no longer compete just by being efficient. More specifically. drives competitiveness at this stage. In the third.1 of The Global Competitiveness Report 2006-2007. As countries move into stage two. The “innovation and sophistication factors” sub-index includes all pillars critical to countries in the innovation-driven stage. 6 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . At this stage.In the factor-driven stage (stage one). education and training programmes that prepare the workforce for more streamlined production (higher education and training) and access to and use of the latest technologies (technological readiness). Turkey is now in the efficiency-driven stage. a stable macroeconomy and sufficient health and primary education levels. which depends more on efficient goods. the separation of countries into stages of development and the weighting of the indexes can be found in Chapter 1. So while all nine pillars matter to a certain extent for all countries. producing new and different goods using the most sophisticated production processes. while innovation and sophistication factors are less so for the time being (10%). countries compete based on low prices. The “efficiency enhancers” sub-index includes those pillars that are critical for countries in the efficiency-driven stage. More details on the composition of the index. the relative importance of each one depends on a country’s particular stage of development. rather than low price. The GCI implements the concept of developmental stages by weighting each of the sub-indexes differently. Based on its GDP per capita level. the pillars are organized into three sub-indexes. At this stage of development. innovation-driven stage. each critical to one particular stage of development. labour and financial markets. The “basic requirements” sub-index groups those pillars most critical for countries in the factor-driven stage. the efficiencydriven stage. which means that efficiency enhancers are critical for the country’s competitiveness (50%) and that basic requirements remain very important (40%). Figure 1 shows how the nine pillars relate to each stage of development. the index places more weight on those pillars that are most important at a given stage of a country’s development. the basic ingredients of competitiveness include strong institutions. depending on the stage of a given country. companies must compete through innovation. taking advantage of such factors as low-cost labour and natural resources. To take this into account. Product quality. it is important for them to develop more efficient production practices. adequate infrastructure.

FYR GCI GCI GCI 2006 Rank 2006 Score 2005 Rank 1 2 3 4 5 6 7 8 9 10 14 17 18 20 21 22 25 28 29 33 34 36 37 39 40 41 42 46 47 48 51 59 68 72 80 5. and authors’ calculations Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 7 . Finally.74 5. The accession 10 average provides an example of the level of competitiveness of those countries that have recently been granted entry to the EU. Table 1.60 5.86 4 2 7 3 5 1 10 6 11 9 16 15 12 20 21 24 26 28 29 30 31 39 36 44 34 35 38 41 47 43 64 71 67 61 75 Changes 2005-2006 3 0 4 -1 0 -5 3 -2 2 -1 2 -2 -6 0 0 2 1 0 0 -3 -3 3 -1 5 -6 -6 -4 -5 0 -5 13 12 -1 -11 -5 - - - - Source: The Global Competitiveness Report 2006-2007.54 4.63 5. the performance of the four other accession or candidate countries provides a sense of how well Turkey is presently performing compared with the other countries most likely to join the EU in the coming years.16 5.74 4.14 4.36 4.33 4.54 5.77 4. specific comparisons are made with the average performance of the 25 EU member countries (EU25). the average performance of the 10 countries that joined the EU in May 2004 (accession 10) and the performance of four accession or candidate countries (Bulgaria. Global Competitiveness Index 2006 and 2005 comparison (Turkey and Selected Countries) Country Switzerland Finland Sweden Denmark Singapore United States Japan Germany Netherlands United Kingdom Iceland Austria France Belgium Ireland Luxembourg Estonia Spain Czech Republic Slovenia Portugal Latvia Slovak Republic Malta Lithuania Hungary Italy Cyprus Greece Poland Croatia Turkey Romania Bulgaria Macedonia.52 4.02 3.60 4.96 3.12 4. The EU25 group average demonstrates what needs to be achieved to bring Turkey fully up to EU levels of competitiveness.76 5.56 5.55 4.58 5.46 4. as well as in each of the sub-indexes and pillars of the index.30 4.53 4.70 5. In order to place Turkey’s performance into a global context. Croatia.81 5.21 5.31 5.64 4.61 5.Measuring Turkey’s Competitiveness In this section we carry out an analysis of Turkey’s performance in the overall GCI. Macedonia and Romania).27 5.40 5.57 4.26 4.32 5.

49 4.28 6.12 4.09 4. Good markets: distortions. Labour markets: flexibility and efficiency 81 1.58 5.36 3.58 5.75 3.38 3.99 3.05 2.80 3.26 68 83 55 73 4.21 3.69 4.87 4.41 4. and authors’ calculations 8 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . Government Inefficiency 56 (red tape.83 87 3.92 6.89 4. Health 65 B.47 2.45 6.17 4.83 5.19 3.71 3.93 4.38 6.67 3.63 6.53 3.42 3.37 3. Property rights 53 2.03 6.76 4.48 4.78 4.67 4.60 4.38 6.42 5.60 2.98 4.07 87 2.04 4.99 4.78 4.88 3.23 4.33 4.34 4. Undue Influence 52 4.04 4.76 6.54 72 62 70 85 109 111 91 105 109 100 112 94 80 106 65 35 39 52 45 62 37 70 94 90 88 113 91 57 96 78 104 88 68 84 78 98 87 3.44 4. Public institutions 53 1.36 100 2.84 6.75 4.62 4.43 4.48 3.46 4.66 3.79 4.32 3.86 4.41 4.71 3.Table 2.54 3.31 4.77 4. On-the-job training 37 6th Pillar: Market efficiency 47 A.62 5.11 2.07 3.24 4.40 5. Corporate Ethics 47 2. Distortions 65 2.10 4.85 4. Private institutions 52 1. Competition 37 3.77 4.40 4.37 3.77 3.71 3. 36 competition and size 1. Networks and supporting industries 33 B.07 3.07 5.06 4.70 3.96 4.50 3.15 4.89 3.18 4.31 4.33 4.44 4. Efficiency 60 C.75 76 2.41 3.16 5.59 3. Security 63 B.38 4.17 4.86 4. FYR Rank Score Global Competitiveness Index 2006-2007 Basic requirements Efficiency enhancers Innovation factors 59 72 54 42 4.33 3.40 3.99 3.26 3.67 4.57 3.53 3.81 3.03 4.34 4.07 3.35 4.54 3.59 3.09 4.26 4.35 Score* Score* Rank Score Rank Score Rank Score Rank Score 4.05 4.72 3.48 6.18 5.12 4.90 3.75 6.45 80 70 80 87 103 102 107 91 97 86 105 100 100 96 82 30 54 53 65 66 64 50 76 91 101 100 101 98 86 71 92 81 91 88 89 94 86 3.88 2.14 51 55 52 50 66 65 81 50 76 65 66 72 69 71 51 73 67 37 84 44 48 43 47 68 76 97 60 62 66 69 63 68 47 61 64 58 45 4.68 3.68 4.08 4.13 93 2.40 4.83 3. Accountability 63 2nd Pillar: Infrastructure 63 3rd Pillar: Macroeconomy 111 4th Pillar: Health and primary education 78 A.28 4.91 4.89 3.26 3.60 4.23 3.43 4.36 4.98 3. Ethics and corruption 47 3.84 5.14 4.30 6. Flexibility 92 2.02 3.18 4.29 3.46 3.23 3. Quality of education 60 C. Quantity of education 68 B.05 3.55 3.94 6.06 3.60 4.72 3.47 3.40 3.73 4.01 4.03 4.62 6.31 4.56 2.14 4.23 4.59 3.62 6.25 4.61 6.05 3.07 2.90 4.76 4.58 2. Primary education 80 5th Pillar: Higher education and training 57 A.15 3.06 4.36 3.74 5.79 5.47 3.04 4.91 4.74 6.97 5.15 2.50 4.90 4.05 5.22 4.59 4.36 5.69 4. Size 19 B.96 4.40 3.71 3.93 83 70 88 96 84 77 97 69 68 66 50 51 40 58 76 57 76 65 44 87 88 78 73 49 73 68 77 68 * For regions.13 3.52 3.74 4.27 4.14 3.29 4.96 3.80 3.12 5.54 6.89 4.46 4.23 5. Sophistication of firms 47 operations and strategy 9th Pillar: Innovation 51 3.57 3.59 4.40 2.60 4.30 3.06 3.44 2.74 3.96 4. bureaucracy and waste) 5.92 4.35 3.11 3.56 4. score is the unweighted average across the region's countries ** EU Accession 10 Source: The Global Competitiveness Report 2006-2007.49 4. Financial markets: 58 sophistication and openness 7th Pillar: Technological readiness 52 8th Pillar: Business sophistication 39 A.47 6.86 4.18 4.26 4.10 4.17 4.15 5.81 3.02 4.34 4.40 3.70 4.71 6.24 3.42 4.03 4.50 3.00 4.98 1st Pillar: Institutions 51 A.58 6.12 3.99 3.47 5.34 3. Turkey’s Competitive Performance Turkey EU 25 EU A10** Bulgaria Romania Croatia Macedonia.34 4.78 3.55 4.59 4.46 3.15 4.66 4.14 3.02 4.

The table shows that Turkey has seen an impressive improvement in competitive performance over the past year. The next sections will take a closer look at Turkey’s comparative performance in the three sub-indexes and nine composite pillars of the GCI. rising 12 places in the GCI between 2005 and 2006. well ahead of Bulgaria (72nd) and Romania (68th). placing the country 59th out of 125 countries. upgrading infrastructure. The appendix to this study includes a more detailed table with all of the comparative scores and rankings within each pillar down to the individual variable level. such as the stability of the macroeconomic environment (111th). such as reducing macroeconomic vulnerability. Turkish authorities now face the double challenge of needing to fully prepare for a more advanced stage of development while. but still behind all of the EU25 countries. innovation (51st). as well as achieving higher levels of institutional accountability and transparency. However. demonstrating the economy’s preparedness to evolve to more advanced stages of development. The table underlines Turkey’s relative prowess in business sophistication (39th). and the four candidate and accession countries. Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 9 . at the same time. still addressing some of the more basic areas. improving the access to and quality of education. as well as their 2005 rankings. it also highlights some areas of particular concern. pointing to the fact that Turkey has not yet sorted out some of the basic requirements of competitiveness. Table 2 provides more details behind what is driving the overall rankings this year. infrastructure (63rd) and primary education and health (78th). to a certain extent.Table 1 shows the 2006 GCI rankings and scores of the top ten performers. This confirms the pace and importance of the progress made. goods market efficiency (36th) and. as well as Croatia (51st). the EU members. In this context.

less wasteful government spending and better overall security in the country. and lags far behind both the EU25 and accession 10 averages. given its present stage of development. Private institutions must also play their part. Table 2 shows that they do not receive a significantly lower rating than the average of the 10 recent accession countries (4. While not at EU levels. Institutions The quality of the institutional framework in which businesses operate is critical to the efficient functioning of the economy and to the vitality and health of businesses. in fact.06) and. and authors’ calculations 10 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . with firms that function ethically and are accountable and transparent to the public. 87th.34. Turkey only outperforms Romania. Among the short-term priorities for reform are the requirements to ensure greater efficiency. Turkey does not score particularly well on this sub-index: with a score of 4. receive a significantly better rating than the other accession and candidate countries. Figure 2 provides a graphical comparison between aspects of Turkey’s institutional environment and the EU member groups and accession countries. As Table 2 shows. transparency and accountability within the public administration. It is therefore not surprising that the institutional environment has been highlighted as one of the major areas of concern within the context of EU accession negotiations. respectively. compared to these countries.62).Sub-index 1: Basic Requirements The factors included in the basic requirements subindex are very important for Turkey’s productivity and competitiveness. the court system is free from undue influence. What are Turkey’s strengths and weaknesses in the four pillars of this sub-index? (4. strengthening the fight against corruption and buttressing human and minority rights.90. An environment characterized by strong public institutions ensures that property rights are protected. Turkey’s public institutions are characterized by better protected property rights. a higher degree of even-handedness on the part of public officials. Macedonia and Bulgaria being ranked 65th. ranked 53rd and with a score of 3. among others. and businesses are not hindered by high levels of corruption. 102nd and 111th. Regarding public institutions. a more independent judiciary.3 While it is clear that much remains to be achieved. Turkey ranks 72nd out of 125 countries. and as mentioned above. with Croatia. government policies are established in an efficient and transparent manner. it is important to note that much progress has already been made with regard to Turkey’s public institutions. greater independence of the judiciary. Turkey’s performance is well behind that of the EU25 average Figure 2. Romania. Turkey’s institutional environment is rated as somewhat mediocre. Of all comparators in the table. Turkey’s Relative Performance in Public and Private Institutions Public Institutions Score 7 6 5 4 3 2 1 0 Property rights Ethics and corruption Undue Influence Government Inefficiency Security Turkey EU 25 Accession 10 Bulgaria Romania Private Institutions Score 7 6 5 4 3 2 1 0 Corporate Ethics Accountability Source: The Global Competitiveness Report 2006-2007.

Turkey’s inflation rate of 8. the institutional environment compares relatively well to the country’s peers. Efficient modes of transport for goods. Even more worrisome is the quality of the country’s ports. although characterized by a number of its own inefficiencies. worse. Notably. a number of specific measures have been taken in order to meet EU requirements such as those outlined in the Copenhagen criteria.2 in 2005 (the most recent year for which we have year-end data) still places it 94th overall. Other reforms include a constitutional amendment reinforcing civilian over military supremacy and the subordination of domestic law to international law in the area of human rights. where debt servicing costs are high. are vitally important. Often.46. with a number of key policy reforms. of particular concern is the general lack of quality of Turkish railroads and an electricity supply that is characterized by relatively frequent interruptions and shortages.8% of GDP) were still very high by international standards. Turkey still demonstrates a number of weaknesses in its macroeconomic environment. particularly with regards to the quality of private institutions and ethical business practices. Although all infrastructure assessed is well below European averages. of the four candidate and accession countries used Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 11 . putting Turkey at 115th Infrastructure Without quality infrastructure. Further. More generally. Our research thus indicates that. Most strikingly.31). governments must curtail public investment or. ranked 76th overall.9% of GDP) and debt (72.49. given the importance of maritime transport for Turkey’s economy. with the likes of Georgia. vital spending on education and public health. Ranked 52nd overall and with a score of 4. Macroeconomy The importance of macroeconomic stability for competitiveness is well known. people and services. Botswana and Honduras. It is hoped that the privatization of many of the ports will lead to improvements in quality and efficiency in years to come. particularly with regard to the quality of utilities such as telephone lines and electricity. ports and air transport. improved protection of human and minority rights and greater freedom of expression. they cannot be allocated effectively. while much remains to be achieved to bring the country up to average EU standards. reform of the judiciary. ranked 63rd overall and with a score of 3. Turkey’s private institutions receive slightly better comparative marks.03). it is impossible to ensure the efficient functioning of the economy. including all countries in Table 2 (the second worst being Romania at 97th).The state of Turkey’s institutions reflects a process of institutional reform that has been carried out in the country in recent years. It is impossible for businesses to make informed decisions when inflation is spiralling out of control or when large government budget deficits lead to the misallocation of resources and drive up the cost of capital. although again well behind overall EU levels. the country’s corporate ethics. and well below any EU member. for comparison. as are an electricity supply free of interruption and a solid telecommunications network. is rated as better than the accession 10 average (4. Croatia’s infrastructure.28). This includes the abolition of the death penalty. Whereas inflation has been coming down significantly around the world in recent years. only two (Romania and Macedonia) have infrastructure that is assessed as being of a significantly lower quality than that of Turkey.44. Ranked a dismal 111th overall in this pillar.50) and well ahead of the four other accession and candidate countries. In particular. ranked 47th and with a score of 4. such as good quality railroads. and of the 10 recent accession countries (4. gets significantly higher marks. which erodes the competitive potential of the country. is significantly below that of the EU average (5. an increase in the rights of political parties and freedom of association. The quality of Turkey’s infrastructure. Turkey’s performance is worse than the great majority of the 125 countries covered by the GCI. When the repayment of government debt is devouring a major portion of a country’s resources. in 2005 the government budget deficit (5. they are on a par with the accession 10 average (4. also clearly shown in Figure 2. Although progress has clearly been made since the 2001 crisis.

as demonstrated by the recent episode of emerging market volatility in March of this year. as it leaves the country prey to the whims of international investors. Turkey must continue to bring down its debt levels if it is to reduce its vulnerability to rising worldwide interest rates and exchange rate volatility. Health and Primary Education In order for a country to be competitive at all stages of development. providing a basic education to all children in the country and thus preparing the basis of human resources development in the country. The overall picture is that. Turkey remains highly vulnerable to external shocks. this in fact remains quite low by international standards given the large number of countries that have already attained universal enrolment. Turkey receives very low marks in this area. In this context. Brazil and Russia. More generally. In fact. this places Turkey 80th out of the 125 countries covered in the GCI.7% in 2006) raises cause for concern. compared with the other emerging market economies which have experienced financial crises in recent years. it must have a healthy workforce with at least a basic level of education. This echoes the fact that per capita spending on healthcare remains low in the country by international standards. given the weaknesses of the public school system. In particular. Concerning basic education. This is perhaps surprising given that the country’s spending on education is among the highest of OECD countries (7% of GDP). but can be explained by the fact that much of this comes from private sources. as shown in the table. only Romania has slightly worse health indicators. meeting the government’s objective of an overall fiscal balance will improve the macroeconomic framework. education and other programmes. followed only by Croatia of the countries shown in Table 1. Turkey must work to bridge this gap by attaining universal primary enrolment. as well as that of the 10 recent accession countries. such as Argentina.and 86th respectively. Turkish children spend on average many fewer years in school compared with the European standard. Of the countries in Table 2. In terms of health indicators. while a great majority of Turkish schoolchildren receive a primary education (89%). This is far below the attainment rates of existing EU member countries. thus freeing resources for essential infrastructure. Improvements in this area will continue to be critical to Turkey’s ability to ensure sustainable economic progress in the future. It is clear that improving the health of the workforce is a priority in improving Turkey’s overall competitiveness. Turkey’s burgeoning current account deficit (estimated by the IMF at 6. ranking 78th overall. as well as the attainment rate of primary education. Turkey performs significantly worse than the EU25 average. which are significantly worse than European averages. This concerns the minimum requirements for workers to function properly when performing basic tasks and can be measured by national health indicators such as life expectancy and rates of illness. while access to care remains financially difficult for the poorest citizens. Of particular concern are indicators such as infant mortality (79th) and life expectancy (66th). 12 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum .

4% for the Higher Education and Training As an economy begins to take on more complex production tasks. labour (81st) and financial market (58th) components. financial markets still suffer from a number of rigidities and shortcomings that need to be tackled to ensure the country’s sustained competitiveness.5% as compared to the 27. where a strong emphasis is traditionally placed on educational attainment. thanks to the size of its internal markets (19th) but also to the recent microeconomic reforms aimed at reducing red tape and bureaucracy and promoting competition. while the traditional educational system receives rather low marks.7% versus an average of 65% for the EU15 (pre2004).68 versus 4. Concerning the quality of the educational system and its ability to meet the needs of a competitive economy in a rapidly changing business environment. employment requires a very high employee-employer contribution rate (36. With respect to the labour market. This can be measured by the quantity of secondary and tertiary education. With an overall ranking of 57. For example. with its 79% secondary enrolment placing it 75th and 29% tertiary enrolment placing it 60th. flexibility of wage determination (81st) and degree of cooperation between labour and employers (84th). workers.25. higher education and training become critical. does better in this area than Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 13 . and above 50% for most countries in the world. which can be attributed in part to a shortage of teachers. the Turkish higher education and training pillar gets better marks than primary education attainment (discussed above). the accession 10 countries on average (4. as described below. in terms of the quantity of education obtained within the country. Turkey’s severance pay is among the most generous in the world. as demonstrated by the high accession 10 score in Table 2. Turkey is also falling short compared with the European average. Yet some weaknesses remain in the three pillars of this area. where competition is based more and more on efficiency and innovation. Turkey seems to have achieved a relatively satisfactory degree of goods market efficiency (only marginally below the EU25 average. including many of the recent accession countries. these are still not high enough by European standards. the well-intentioned concern for offering maximum protection to workers has prevailed over job creation.18) and significantly better than any of the other accession and candidate countries shown in Table 2. Here Turkey ranks a much higher 37th overall and. In fact. in Turkish labour legislation. to a lesser extent. On a more positive note. Market efficiency becomes especially important as economies move from factor-driven. hence its special relevance for Turkey. presently in stage two.4 On the other hand. Turkey’s private sector is doing quite a bit better in terms of providing on-the-job training to workers. Indeed. lower stages of development to more advanced stages. Market Efficiency The existence of well developed and functioning markets is a necessary precondition for an economy to achieve sustained levels of productivity and growth and ensure that national resources – goods. It is clear that higher levels of investment in public education will be necessary to prepare the country to be competitive. Turkey’s overall ranking of 47th for this pillar masks a rather uneven performance in the goods (36th). and higher than the accession 10 average of 4. the quality of the educational system and the availability of specialized training for the workforce.40 and the other candidate countries). It seems clear that.78. Table 2 shows that the country’s performance in this area is quite a bit stronger than in basic requirements (described above). labour and. as suggested by the extremely low rate of employment in the country: 43.Sub-index 2: Efficiency Enhancers Given its stage of development. those factors grouped in the efficiency enhancers sub-index are the most critical for Turkey’s competitiveness (accounting for 50% of the weighting in the overall GCI). all of which become necessary for more sophisticated business processes. its comparative enrolment rates improve the higher the level of education in Turkey. services or capital – are allocated to their most effective use. with a score of 4. with low marks for hiring and firing practices (89th). with a score of 4. However. flexibility (92nd) is a major concern.

although it is higher than Bulgaria’s score (3.56. Figure 3 provides a visual comparison of Turkey’s performance to other European countries. one out of three workers in urban areas.Figure 3. contributing to sluggish growth in many countries. even if with a score of 4. it means that firms in competitive countries are aggressive in integrating existing and new technologies into their production processes. and three out of four in rural ones. Turkey is doing remarkably well regarding the degree of sophistication of financial markets (36th) and access to the local equity market (34th) given its present stage of development. However.5 Given that Turkey would need to generate about 14 million jobs by 2010 to meet the 70% employment rate envisaged by the Lisbon agenda.74) and even that of the accession 10 average (4. ranks 52nd overall in technological readiness. foreign direct investment (FDI) is not an important source of technology for the economy. restrictions on fixed-term and temporary work agencies are almost unique in the OECD and. 14 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . This differs from technological innovation in the sense that it is not necessary to invent the telephone or the Internet in order to capitalize on their productivityenhancing qualities. Turkish firms are assessed as being relatively aggressive in adopting new technologies (25th). although this should not lead to complacency. Rather. ICT access and usage have become fundamental elements determining economies’ overall levels of technological readiness. combining flexibility with labour protection. According to the World Bank. are not registered with the social security system. with a score of 3. since 1992. In particular. This underlines the preparedness of at least part of the private sector to use technology to upgrade production systems. Financial markets are relatively more efficient. On the other hand. The figure clearly shows that the EU on average suffers from inflexible labour markets.38). Turkey registers rather mediocre scores for the availability of capital from the local market in terms of loans from the banking sector (73rd) and venture capital (77th). In terms of technology absorption.06) or accession 10 (4. This is significantly lower than the EU25 average score (4.48) levels. This is crucial for generating more jobs and reducing the incentives for the informal market to prosper. the technological readiness pillar measures countries’ capacities to absorb technology and this is complemented by the innovation pillar (described below).38). so that the EU labour markets are not necessarily the best benchmark for Turkey to follow in improving its competitiveness. Turkey. information and communication technologies (ICT) are of particular importance as they have evolved into the “general purpose technology”6 of our time. Technological Readiness Technological readiness indicates the extent to which a country is harnessing existing technologies to enhance the productivity of its industries. Sticky labour markets are posing difficulties for the region as a whole. Turkey’s Relative Performance in Market Efficiency Score 7 6 5 4 3 2 1 Turkey EU 25 Accession 10 Bulgaria Romania the banking system is still perceived as not sufficiently sound (99th).23 they have not yet reached the EU25 (5. it is imperative for the country to focus on labour market reforms. Among new technologies. In this sense. Good markets Labour markets Financial markets Source: The Global Competitiveness Report 2006-2007. and authors’ calculations OECD20 average).21) and has improved a bit since last year (3. there is no minimum pension age. notwithstanding the comprehensive legal and institutional reforms undertaken after the 2001 financial crisis. which assesses countries’ endogenous innovation potential. Also. given the critical spillover of ICT to the other economic sectors and its role as efficient infrastructure for commercial transactions.

Of the various stakeholders in society. Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 15 . The World Economic Forum’s Networked Readiness Index (NRI). which measures countries’ readiness to leverage ICT for development and growth. Turkey’s ICT readiness should also be reinforced: the country is placed at a rather low 55th ranking for perceived technological readiness and at 52nd for the quality of the regulatory framework for facilitating ICT adoption. the NRI estimates that the Turkish business community is the most “technology/ICT ready”. Considering the key role of technological readiness for the country at its particular stage of development. even if rising from last year. a continued effort from all actors of Turkish society will be necessary to achieve better levels of technology absorption and ICT penetration. with the government and individuals lagging behind.with a mediocre ranking of 60th. Moreover. provides a similar assessment. Turkey was ranked 48th out of 115 countries in 2005. inferring that much potential remains to be tapped in this area. Internet (56th) and cellular telephones (52nd) are all quite low by European standards. on an upward trend starting in 2003. ICT infrastructure and penetration rates remain very low: the use of personal computers (72nd).

such as local supplier quantity (29th) and quality (39th).6 in 2004. However.7 respectively. the industry and services sectors are perfectly competitive with the accession 10 countries. the pillars included in this more complex sub-index are not yet the most important for Turkey’s competitiveness (10%). Figure 4.Innovation and Sophistication Factors For the time being. Turkey’s Relative Performance in Innovation and Sophistication Factors Score 7 6 5 4 3 2 1 0 Business sophistication Turkey EU 25 Accession 10 Innovation Bulgaria Romania Business Sophistication As countries evolve to the most advanced – innovation-driven – stage of development.46) and. as well as in variables pertaining to the sophistication of Turkish firms’ operations and strategies.8 significantly less than the industrial (25%) and the services (60%) sectors. as compared to 9. although the rural sector still accounts for around one-third of Turkey’s labour force and is characterized by a rather low level of average labour productivity (value added per employed person) – 4. which are characterized by significantly higher productivity levels. as well as with the accession 10 average and the other accession and candidate countries.58. With a rank of 39 and a score of 4. the sophistication of their productive systems and processes acquire increasing importance as key drivers of competitiveness. and authors’ calculations Turkey’s prowess in business sophistication not only bodes well for its prospects to evolve toward more advanced stages of development. shows a competitive advantage in this pillar.7 and 7. this is the area in which Turkey is already showing the greatest competitive strength. they will gain importance as the country moves towards the next stage of economic development and with further integration with the EU. such as their control of international distribution (29th) and the extent to which they are producing goods higher up on the value chain (37th). as Table 2 and Figure 4 show. The business sophistication pillar looks both at the presence of integrated and high-quality productive networks (fostering the formation of clusters) and at the sophistication of companies’ operations and strategies. Source: The Global Competitiveness Report 2006-2007. Turkey gets particularly good marks for its clusterrelated infrastructure. demonstrating comparable – if not better – levels of business sophistication and modernization. With average labour productivity of 13. efficient production processes and exploiting economies of scale have developed everywhere. Bulgaria (3.6 respectively for the Czech Republic and Hungary7 – it represented only 11. Turkey presents quite an interesting case given its stage of development since it.9 be found within each sector of the national economy.5 and 15. since the country can still increase its productivity by improving the factors described in the sections above.89). business sophistication is by far the pillar in which Turkey does best and outperforms both the accession 10 average (4. This “dual economy” connotation can also. Turkey is assessed as doing well regarding business sophistication compared with its own performance in the other GCI pillars. Indeed. but also corroborates the progress achieved in recent years. in fact. since modern companies adopting advanced technology. by a rather large margin. to a certain extent.3% of GDP in 2004. On a hopeful note.59) and Romania (3. 16 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . side by side with traditional companies that are generally medium-size enterprises with lower levels of productivity and less efficient processes.

However. Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 17 . with a rank of 51 and a score of 3. More generally. such as public procurement of high technology goods and intellectual property protection. with rankings of 62nd and 71st respectively. as opposed to static ones (based on natural endowments and production factors with diminishing rates of return). On a more negative note.45). Looking at the three main innovation enablers – government. but should be addressed in coming years as the country moves to more advanced development stages and in view of potential future EU membership. the economy already performs better in this area than all accession and candidate countries with the exception of Croatia (3. the business sector and research institutions – Turkey scores comparatively well in business sector and academia related variables such as the extent of research cooperation between the private sector and universities (46th). remain areas of concern for the country. mirroring the performance of business in the technological readiness pillar (described above). Turkey ranks a disappointing 70th place for the number of US utility patents granted per million inhabitants. in spite of remaining well behind world leaders in innovation. Given Turkey’s stage of development. government-related variables. countries ensure increasing levels of prosperity and living standards for their citizens. suggesting that the domestic innovation potential has not yet been fully tapped with regard to the development of new processes and products. the availability of scientists and engineers (44th) and companies’ capacity for innovation (47th).35. In particular. innovation becomes the only sustainable driver of productivity growth for firms and countries alike.Innovation In current knowledge-based and interconnected economic systems. Turkey has not reached the innovation-driven stage and can still improve its productivity by getting more of the “basics” right (as described above). the shortcomings underlined in this section are not extremely worrisome at the present time. the capacity to generate endogenous innovation becomes a precondition for countries having reached the technological frontier to generate sustained productivity increases and achieve enduring competitiveness. By developing national dynamic competitive advantages (based on technology and high value-added products).

Conclusions This Report has explored the drivers of Turkey’s competitiveness. Turkey’s Quest for Stable Growth. such as the stability of the macroeconomic environment. Economic Profile.europarl. In this regard. with the aim of providing a benchmarking and tracking tool for policy reform and implementation in the country. 26 June 2006. and Ulgen S. Historical Review. The analysis has shown that while Turkey does quite well in some of the more complex competitiveness dimensions such as business sophistication and technological adoption.. In order to place Turkey’s performance into a global context. Country Profile. E. and Meen D.eu European Commission. World Bank Policy Research Working Paper 3908.mckinseyquarterly.. 2006. and which are critical for enabling improvements in productivity and growth at the present time. Turkey should be commended for the great progress it has achieved in recent years. 2003. 2004.uk Delegation of the European Commission in Turkey.int Dervis.europa. Online: http://newsvote. Turkey. European Commission. the accession 10 average. K. 2006.eu European Commission.. References BBC News.. Emerson M. 2006. The World Economic Forum stands ready to support Turkey in its development process through its annual comparative analysis.europa. Brussels: Centre for European Policy Studies.europa. 18 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . 2006. EU-Turkey Relations. reforms and actions must still be carried out on several fronts.. Dincer Bacer D. Online: http://ec.. Gros D. 2006. The McKinsey Quarterly Special Edition: Global Direction. Online: http://ec.deltur. Online: http://ec.com European Commission. Political Profile. as there is a challenging road ahead. 2006.eu European Commission. which – given sufficient political will – should ostensibly be easier to address. 27 September 2006.eu European Parliament. it continues to lag behind in some of the more basic requirements for competitiveness. Key Events in TurkeyEU Relations. and the performance of the four other accession and candidate countries. and Ng F. The European Transformation of Modern Turkey. Progress Report 2005.eu. Online: http://www. the quality of public institutions and the educational system. Special Report on Turkey. Turkey Evolving Trade Integration into Pan-European Markets. Brussels. Kaminski B. although it lags behind in more basic factors. Press Service.bbc.europa. Farrell D. based on the findings of the Global Competitiveness Index.eu Financial Times. specific comparisons have been made with the European Union average. Online: http://www. which is reflected in the country’s impressive rise in the competitiveness rankings. this should not lead to complacency.europa. Online: http://www. While this bodes well for Turkey’s ability to be competitive at a higher stage of development.. However. it is notable that the country’s competitive strengths are primarily in areas that are normally reserved for countries at higher stages of development. it also highlights the need to address some of the more basic issues. 2005. 2006. European Parliament Critical of Slowdown in Turkey’s Reform Process. Online: http://ec.co.cec. For Turkey to move to a higher stage of development and achieve European standards of competitiveness.

Hungary. at 112th. Further information on the Executive Opinion Survey can be found in Chapter 3. Romania – and the EU15. However. Ezoneplus Working Paper no.economist. Online: http://www. Strengthening Innovation and Technology Policies for SME Development in Turkey. Yilmaz B. recent high-profile cases involving the prosecution of intellectuals under article 301 for “insulting Turkishness” continues to cause some concern in European circles. and Mia I. The Economist. preserving rural income but 5 6 7 8 9 minimizing economic distortions. their importance is more relevant in the retailing of consumer goods. Schwoag Serger S.Lopez-Claros A. Altinger L.org Although the penal code has been revised. the cost of agriculture policy. Drzeniek M. Brookings Institution.. Malmo: IKED. further liberalization is needed in view of EU membership and especially to modernize and make the agriculture sector more efficient.. Berlin: Jean Monet Centre of Excellence. The Global Competitiveness Index: Identifying the Key Elements of Sustainable Growth. which is available from the World Economic Forum on request. Poland. Dartford: Kent: Paterson Dartford. 12. 2003. 2006. K.com/countries/Turkey The Economist Intelligence Unit.1 in The Global Competitiveness Report 2006–2007. The Economist. Forecast. Online: http://www. Wolfowitz P. 2004) – in a CAP sense. Please send requests to gcp@weforum. Turkey’s Competitiveness in the European Union: A Comparison with Five Candidate Countries – Bulgaria.1 of The Global Competitiveness Report 2006-2007. New York: Palgrave MacMillan. Factsheet. Too Big to Handle? 23 June 2005. whereas traditional companies account for 31% of employment in the automotive sector and are virtually absent in telecommunications and retail banking. 2006.com/countries/Turkey The Economist. Napier G.e. Poverty Reduction and Economic Management Unit in Europe and Central Asia Region.. Examples of GPT include the invention of the steam engine or the electric dynamo. is still perceived as an hindrance for Turkey’s competitiveness: although Turkey is in the process of reforming its burdensome and inefficient agriculture policies – accounting for 4% of GDP in 2004 (K. The Global Competitiveness Report 2006-2007.. Footnotes 1 2 3 4 The GCI was developed by Xavier Sala-iMartin and Elsa Artadi for the World Economic Forum. see chapter 1. 2004. the Czech Republic. according to Trajtenberg (2005b). 2006. Dervis et al. Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 19 . is one which. Blanke J.. Turkey: Embracing East and West.tr World Bank. April 2006. Sakip Sabanci Lecture.worldbank. i. A general purpose technology (GPT).. World Bank.. Dervis et al. 2006.. in which they represent 88% of all labour force.org. in any given period. and Wise Hansson E. Online: http://www. EIU. 2006. Coming Apart? 4 May 2006. For example. For more details on the most recent calculation of the GCI. 2006. 2004. Turkey Labour Market Study. The Economist. Country Report: Turkey. April 2006.economist. contributes particularly to an economy’s overall growth thanks to its ability to transform the methods of production in a wide array of industries.

16 2.05 3.31 50 -0.18 4.07 2.44 5.58 2.23 4.22 2.34 4.06 Telephone lines (hard data) 47 3rd Pillar: Macroeconomy 111 3.30 2.52 3.14 Protection of minority shareholders' interests 58 1.96 4.97 46.60 4.15 Strength of auditing and 60 accounting standards 2nd Pillar: Infrastructure 63 2.31 25.08 Business costs of terrorism 90 1.07 4.60 72.47 3.92 3.78 2.03 3.20 4.52 * For regions.64 3.44 4.04 8.19 5.19 4.87 4.96 21 28.76 -2.16 3.62 3.76 3.66 4.66 3.96 3.37 3.92 4.07 Burden of government regulation 64 5.14 3.09 5.03 5.40 5. bureaucracy and waste) 1.21 3.73 4.06 4.01 5.64 2.48 90 3.04 Judicial independence 50 1.50 3.12 5.44 5.83 50 5.05 Quality of electricity supply 71 2.02 81 3.89 96 3.Appendix Turkey EU 25 EU A10** Bulgaria Romania Croatia Macedonia.85 97 13.59 82 1.68 3.21 3.69 4.67 3.22 1.19 51 55 52 50 66 65 81 81 50 50 54 76 82 55 65 66 69 66 27 77 63 84 72 69 69 71 67 94 58 4.11 4.01 Property rights 53 2.81 3.72 3.59 4.52 4.53 3.76 3.26 2.77 2.47 3.23 5.18 5.66 4.46 3.60 4.03 Inflation (hard data) 94 3.01 Overall infrastructure quality 64 2.59 5.87 80 70 80 87 103 102 107 107 91 84 100 97 108 83 86 94 70 105 105 72 95 119 100 100 100 96 117 93 82 82 80 69 113 109 67 50 30 36 81 2 59 36 56 3.05 3.14 1.81 22.20 5.01 4. Corporate Ethics 47 1.09 4.15 2.29 5.86 51 3.10 4.08 5.62 5.83 2.33 70 4.69 4.11 5.94 73 4.40 4.91 18.06 Real effective exchange rate (hard data) 117 3.02 4.69 42.37 4.02 National saving rate (hard data) 74 3.90 3.02 3.98 4.50 107 2.57 83 2.38 5.33 79 3.10 Business costs of crime and violence 51 1.02 Diversion of public funds 48 1.09 Reliability of police services 47 1.54 4.71 2. Security 63 1.86 19.80 2.90 4.98 2.63 70 4.32 52.78 3.06 3.46 60 2.95 69 3.26 4.21 2.65 52 3.42 3.97 5.92 3.26 3.92 48 44.83 87 3.57 39.57 3.55 4.65 101 2.13 2.36 100 2. Government Inefficiency 56 (red tape.24 2.50 5.29 4.44 4.05 Government debt (hard data) 86 3.78 103 -4.63 2. Undue Influence 52 1.35 5.97 4.84 97 4.31 4.46 5.62 4.05 Favouritism in decisions government officials 50 4.81 4.01 20.03 Quality of port infrastructure 76 2.74 2.47 2.68 108 2.19 15.81 3.75 76 3.18 5.38 5.56 2.24 17.02 Railroad infrastructure development 67 2.17 5.31 4.13 4.07 3.07 3.62 4.31 75 3.69 4.03 Public trust of politicians 51 3.06 Wastefulness of government spending 58 1.45 3. score is the unweighted average across the region's countries ** EU Accession 10 20 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum .25 30 42.03 0.73 4.36 4.49 4.76 4.05 51 3.50 4.84 3. Ethics and corruption 47 1.02 3.41 77 3.34 3.17 4.11 35.90 4.74 4.14 4.80 88 3.89 96 3.24 3.00 -1.93 4.82 3.74 11.13 59 20.81 2.91 15 18.83 108 13.12 3.93 4.62 -2.23 3.56 4.96 4.12 72 3.40 3.00 4.12 5.30 118 23.20 4.34 54 2.41 4. Property rights 53 1.19 3.53 4.47 3.57 3.18 90 9.44 3.01 3.21 5.52 3.19 3.93 2.28 4.71 3.92 97 3. Accountability 63 1.74 79 3.14 4.44 4.74 2.07 87 2.98 3.17 0.36 50 4.01 4.11 1st Pillar: Institutions 51 A. Private institutions 52 1.41 84 5.07 3.09 4.40 5.01 Government surplus/deficit (hard data) 115 3.51 2.18 72 2.66 3.22 3.40 3.42 2.82 5.46 35. Public institutions 53 1.66 5.15 1.90 2.75 76 2.59 5.18 3.68 4.13 93 2.00 98 9.12 4.21 3.07 4.30 3.76 4.67 3.72 4.30 17.00 50 3.48 31.31 4.11 Organized crime 70 B.18 3.43 4. FYR Rank Score Score* Score* Rank Score Rank Score Rank Score Rank Score Global Competitiveness Index 2006-2007 Basic requirements Efficiency enhancers Innovation factors 59 72 54 42 4.51 4.23 5.99 3.46 3.28 3.11 26.96 61 2.04 Quality of air transport infrastructure 54 2.74 4.54 3.55 4.30 3.22 110 2.58 3.67 5.03 7.12 Ethical behaviour of firms 47 2.54 3.88 2.04 Interest rate spread (hard data) 60 3.13 Efficacy of corporate boards 83 1.70 4.99 3.99 3.26 4.85 5.88 3.58 -5.71 84 3.86 4.47 72 62 70 85 109 111 91 91 105 108 105 109 100 112 100 101 92 112 95 117 97 118 94 80 80 106 104 122 74 65 89 45 71 92 75 35 35 20 89 69 52 29 110 3.51 89 2.26 68 83 55 73 4.30 4.67 4.

85 3. Primary education 4.97 5.48 6.33 89.19 6th Pillar: Market efficiency 47 4.09 Net primary enrolment (hard data) 5th Pillar: Higher education and training A.62 3.06 Local availability of specialized research and training services Rank Score 78 65 28 24 9 79 66 49 76 1 80 80 57 68 75 60 60 73 57 61 37 41 6.80 66 4.05 Quality of management schools C.00 start business (hard data) 6.64 13.15 89 3.23 103.14 0.63 5.36 89 4.40 3.45 5.33 6.79 6.93 0.78 69 68 50 68 49 60 53 86 1 1 66 66 50 51 63 44 40 51 11 70 58 44 81 76 57 6.00 101 3.10 Foreign ownership restrictions 82 4.10 12.53 29 60.57 3.88 29.00 65.64 3.97 30.42 2.59 95.57 109 10 3.26 4.10 71.82 18.31 91.16 5.30 4.31 4.15 4.93 4.75 6.06 Intensity of local competition 27 5.28 109 2.58 6.99 65 3.03 Extent and effect of taxation 83 2.12 59 4.93 4.08 HIV/AIDS prevalence (hard data) B.84 4.02 Tertiary enrolment (hard data) B.62 6.42 84.90 62 4.65 0.02 Medium-term business impact of tuberculosis 4.41 4.80 44.03 69 4.83 4.95 92.75 4.43 4. Distortions 65 3. Health 4.81 5. Quantity of education 5.00 70 11.60 74 4.1 6.00 <0.38 6.06 3.03 3.05 Time required to start a business (hard data) 8 9.00 <0.77 4.51 5.45 6.08 Imports (hard data) 76 35.28 0.05 Life expectancy at birth (hard data) 4.44 4.62 3.11 4.44 6.44 85 5.12 76 2.38 6.24 52 4.02 88.31 4.01 101 4.00 <0.93 6.56 5.63 56 47.37 102. Size 19 5.11 4.92 4.53 3.29 4.53 88 2.02 66.92 6.99 3.42 6.88 5.32 5.05 97.41 6.04 Number of procedures to 31 8.46 2.03 Quality of the educational system 5.78 4.64 5.60 4.09 Prevalence of trade barriers 44 4.92 0.33 94.02 Efficiency of legal framework 56 3.03 Medium-term business impact of HIV/AIDS 4.07 Effectiveness of anti-trust policy 34 4.77 3.32 92.1 6.01 3.12 41.30 6.09 4.75 97 3.76 28.33 39 51.75 3.1 0.03 4.07 Malaria prevalence (hard data) 4.69 7.11 Exports (hard data) 88 28.33 3.71 3.85 85.11 3.04 4.38 6.00 65 4.25 4.00 75.34 3.59 90 4.41 3.74 3.26 4.79 44 4. FYR continued 4th Pillar: Health and primary education A.34 57 4.88 54 53 88 87 80 52 53 41 1 1 65 65 66 64 65 64 50 43 40 85 76 87 69 91 101 100 76 96 88 6.91 88.74 6.96 4.30 54 4.04 Infant mortality (hard data) 4.19 98 3.87 3.34 108 4.02 4.07 Extent of staff training 39 4.90 27.36 56.00 81 48.71 6.12 39 52 75 81 66 48 53 44 1 1 45 45 62 37 18 40 70 83 51 82 94 80 114 90 88 113 123 113 98 6.00 4.Turkey EU 25 EU A10** Bulgaria Romania Croatia Macedonia.00 72.82 30 62. On-the-job training 5.98 4.00 <0.00 36.47 Score* Score* Rank Score Rank Score Rank Score Rank Score 6.1 6.80 3.61 6.20 4.83 5.57 17.34 3.08 4.00 58.57 4.68 6.29 5.00 4.70 4.86 4.50 4.77 6.85 10 11.40 3.16 5.40 3.01 Agricultural policy costs 112 2.28 6.00 4.89 75 33.69 99 4.60 3.00 72.09 40.89 6.32 4. Good markets: distortions.00 187.26 67 37 42 35 30 32 39 57 1 1 84 84 44 48 57 46 43 53 31 54 47 34 61 68 76 6.88 5.95 4.00 4.36 3.00 60 4.00 33. 36 4.00 0.15 5.74 79.95 * For regions.79 4.47 56.44 7.46 4.84 6.07 4.00 3.04 4.71 4.40 4.57 103 2.86 6. Quality of education 5.26 81 4.73 4.68 36 59.77 4.47 3.30 3.04 Quality of math and science education 5.34 4.06 Tuberculosis prevalence (hard data) 4.01 Secondary enrolment (hard data) 5.15 15 77.67 58 41.43 94 13.89 67 3.37 5.70 5.85 6.48 2.05 5.15 3.30 5.00 72.95 4.86 6.39 5.62 5.47 3.00 91 3.00 2.11 3.55 33.28 5.40 74.54 6. score is the unweighted average across the region's countries ** EU Accession 10 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum 21 . Competition 37 4.91 2.24 62.52 3.35 A.22 110 3.00 0.00 85 49.00 <0.68 competition and size 1.25 3.17 4.07 75 2.00 77.80 85 12.81 6.76 4.91 5.01 Medium-term business impact of malaria 4.00 44 32.1 6.47 6.09 6.99 5.62 6.18 4.91 12.80 54.25 4.00 39.07 28.49 6.15 4.

88 3.63 5.77 4.60 3.79 4.43 57 3.26 4.00 2.52 3.52 3.57 26 3.06 Utility patents (hard data) 9.08 5.09 71 3.22 3.41 5.89 61 4.31 87 2.09 3.45 79 3.17 4.84 66 2.71 99 2.48 73 36 4.87 120 3.85 0.26 4.14 Cooperation in labour/employer relations 2.47 2.18 4.08 Value chain presence 9th Pillar: Innovation 9.96 5.86 3. Sophistication of firms operations and strategy 8.04 3.85 4.68 0.03 University/industry research collaboration 9.17 13 5.83 5.05 85 3.14 4.59 78 4.13 Flexibility of wage determination 6.06 4.75 39 4.37 5. Labour markets: flexibility and efficiency 1.71 74 769 63 6.63 117 3.06 4.22 Soundness of banks 6.09 5. FYR Rank Score Score* Score* Rank Score Rank Score Rank Score Rank Score 81 92 89 81 84 60 63 59 58 69 58 4.51 3.44 3.46 68 4.98 4.68 3.51 2.83 98 116 100 72 116 108 69 87 68 97 96 104 49 51 98 79 3.83 116 3.35 76 4.72 3.34 3.36 4.69 4.75 3.72 2.99 87 4.94 84 3.67 4.62 65 2.08 2.66 109 3.17 68 4.90 70 77 74 41 56 80 85 * For regions.35 4.79 5.58 5.08 4.04 5.38 73 2.18 52 47.35 3.29 3.67 2.98 4.46 33 5.07 Personal computers (hard data) 8th Pillar: Business sophistication A.79 39 4.34 4.32 4.48 96 78 76 38 105 104 115 52 121 56 88 3.73 2.22 70 5.41 4.76 0.30 4.44 4.23 70 4.45 4. Flexibility 6. Efficiency 6.96 4.66 3.47 4.61 3.74 3.86 4.11 2.89 3.36 79 4.24 3.22 54 3.61 4.50 3.14 77 4.36 64 4.31 77 3.10 4.52 4.05 4.03 56 1413 4478 4172 72 5.05 Cellular telephones (hard data) 7.32 3.40 4.02 Local supplier quality B.49 5.55 80 4.68 74 3.43 4.79 41 4.59 66 4.53 4.11 4.01 Technological readiness 7.63 45 60.30 37 19.continued 6th Pillar: Market efficiency B.19 3.28 3.24 4.54 4.02 Firm-level technology absorption 7.64 3.28 4.95 3.75 4.23 Local equity market access 7th Pillar: Technological readiness 7.04 66 3.15 Reliance on professional management 6.02 52 3.52 71 3.93 2.18 4.71 4.99 4.72 80 3.33 91 2.27 4.03 85.60 4.21 4.03 3.21 5.42 3.93 68 3.01 3.35 68 3.04 4.51 3.02 Company spending on research and development 9.12 62 4.78 52 3.15 78 5.18 3.66 0.58 4.38 55 4.04 Government procurement of advanced technology products 9.15 3.20 4.52 4.69 106 4.26 4.19 4.46 36 4.06 5.72 34 5.95 77 2.66 5. Financial markets: sophistication and openness 6.31 4.49 4.29 89 4.61 4.77 29 5.10 5.32 60 4.70 86 5.36 73 2.20 Ease of access to loans 6.28 25 5.36 3.72 3.11 2.61 69 4.16 3.13 42 63.13 2.05 Control of international distribution 8.70 3.17 Brain drain 6.95 90 2.21 90 2.70 4.16 4.07 4.16 Pay and productivity 6.74 4.05 Availability of scientists and engineers 9.21 Venture capital availability 6.01 4.60 4.44 63 3.09 86 3.04 Extent of marketing 8.07 73 3.06 Willingness to delegate authority 8.64 3.47 5.99 92.94 3.36 4.04 3.61 49 3.94 53 1590 66 5.98 3.19 Financial market sophistication 6.26 36 2.51 4.60 99 4.26 74 3.08 Capacity for innovation Turkey EU 25 EU A10** Bulgaria Romania Croatia Macedonia.25 4.69 5.44 2.12 35.40 4.58 49 2076 38 2950 51 11.85 4.54 4.35 3.06 4.87 58 61 63 38 64 39 59 45 46 52 35 69 38 32 56 53 3.22 4.96 5.09 4.74 4.32 81 5.59 47 3.50 89 3.21 4.56 4.29 4.59 78 3.80 66 69 54 63 95 63 72 55 61 78 68 4. Networks and supporting industries 8.55 3.36 54 47.69 58 3.95 4.89 94 4.07 Intellectual property protection 9.13 4.77 107 2.39 4.54 3.14 3.16 4.93 120 3.10 106 3.30 3.18 Private sector employment of women C.06 Internet users (hard data) 7.99 2.03 Production process sophistication 8.47 3.89 3.60 3.71 2.47 4.50 3.19 5.10 3.68 3.02 114 4.39 2.07 86 71 57 32 117 92 118 62 109 20 81 4.69 94 92 98 90 90 106 88 86 84 101 58 96 51 79 105 66 3.86 3.32 3.41 52 3.31 3.61 44 3.57 110 4.01 Quality of scientific research institutions 9.83 4.83 4.56 72 3.56 76 4.20 4.37 5.77 6.12 38.44 95 2.69 4.23 4.64 4.52 4.64 26.78 88 3.74 47 43 53 29 50 73 37 51 55 62 46 62 44 70 71 47 4.67 67 2.70 3.88 53 47.27 5.26 3.26 3.07 2. score is the unweighted average across the region's countries ** EU Accession 10 22 Turkey’s Competitiveness in a European Context © 2006 World Economic Forum .15 4.40 88 3.04 FDI and technology transfer 7.33 72 4.04 2.03 Laws relating to ICT 7.12 Hiring and firing practices 6.08 4.59 78 3.07 Nature of competitive advantage 8.14 3.01 Local supplier quantity 8.58 3.

Turkey’s Competitiveness in a European Context © 2006 World Economic Forum .

org) Turkey’s Competitiveness in a European Context © 2006 World Economic Forum . regional and industry agendas. (www.The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global.weforum. the World Economic Forum is impartial and not-for-profit. partisan or national interests. Incorporated as a foundation in 1971. and based in Geneva. it is tied to no political. Switzerland.

Sign up to vote on this title
UsefulNot useful