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Institutional Structures
Institutional Structure of Turkey
At a first glance, Turkey has a diversified economy, excellent infrastructure, and a legal and social structure of a developing nation. Proximity to Europe, integration with European markets, the external anchor of the European Union accession, and a lengthy track record of solid economic management and structural reform are the drivers of Turkey’s long-run prospects (World Bank, 2010). Turkey’s high degree of integration with the world economy, through both trade and financial channels, resulted in the country becoming vulnerable to the impact of the global recession, with the economy contracting by 4.7% in 2009. That being said, the economy has now recovered to pre-crisis levels with growth reaching 7% in 2010, shown to be a larger growth than almost all European counterparts. Despite the economic and political expansion in the last 10 years, Turkey’s battle with corruption, unemployment, income inequalities, and the Kurdish problem have been risk factors for any business that considers investing. According to corruption rankings, Turkey was ranked below South Africa, and tied for a spot with Cuba (Transparency International, 2010). Sociopolitical Structure

Turkey is a parliamentary democracy with a free market economy. Since legal reforms instituted in 1926, Turkey's judicial system has been based on the Swiss Civil Code, the Italian Penal Code, and the Neuchâtel (Swiss) Code of Civil Procedure. The 1982 Constitution guarantees judicial independence, and prohibits any government agency or individual from interfering with the operations of the courts and judges (Country Studies, 2010). The presence and the systematic implementation of these laws create an open path for Foreign Direct Investments; the intellectual property rights are also in favor of the proprietor. Despite a volatile past that included the Marmara earthquake and the 2001 financial crisis as the onset of the global economic slowdown in mid-2008, Turkey illustrated significant progress with regards to social and human development.  Under-five mortality rates continued its striking, decade-long decline, dropping to 23.9 (per thousand live births) in 2008.  Net enrolment rates in secondary school, often characterized as the “Achilles heel” of human development in the country, climbed steadily from 51% (2002) to 59% (2008).  Similarly, poverty decreased from 27% in 2002 to 19% in 2007, and further decreases have likely materialized until mid-2008 (World Bank, 2010).  Such poverty reduction was not merely achieved through the strong growth performance of the economy, but also due to a marked reduction in inequality in society; between 2003 and 2006, consumption inequality declined by more than 10% (OECD, 2010). Despite these significant improvements and achievements, there are a numerous challenges that prevent Turkey from fully reaching its human development potential.  Raising opportunities for its young people and women has always been an example of these challenges; Turkey’s female labor force participation rate is the lowest in the OECD member countries.  Welfare disparities in the country remain large – between regions, between cities and the countryside, and for children from different socio-economic backgrounds. Economic Structure

Turkey’s economy is still heavily dependent on agriculture and raw materials. Industries such as textiles, food processing, autos, electronics, mining (coal, chromate, copper, and boron), steel, petroleum, construction, lumber, and paper play a vital role in the economy. Since 2001, the Turkish government has displayed sound macroeconomic management with more or less comprehensive reforms of various aspects of the investment climate – including taxation, business registration, customs, FDI promotion, Research and Development, and labor legislation (World Bank, 2010). The depth and duration of the after-effects of the global turmoil are still uncertain; a...
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