Economic Aspects of Turkey

1
Economic Aspects of Turkeys Accession to the EU

• Presented by
• Hristiana Pencheva and Iliyan Iliev

2
Overview of Turkey and its relations with the EU

• applied for associate membership in 1959
• became part of the Association Agreement in 1963
• economic and political turmoil
• became a candidate country in 1999

3
Main concerns of the EU policy-makers

• Turkey would have the largest number of council
  votes within 20 years
• Turkey would receive the largest budget transfer
• Large number of Turkish immigrants
• internal problems with the minority rights
• excessive political strength of the military
• The Cyprus question

4
The Budgetary Question

• If it sustains a 5-6 growth it will reach 4 of
  the EU GDP
• It will become the largest beneficiary
• Structural Funds 440.16 of the EU
  GDP22.4bn EUR/year
• CAP expenses agricultural sector is 10 of its
  GDP expenses equal to 0.08 of the EU
  GDP11.2bn EUR/year
• Contribution 0.048 (1.2 of its GDP) of the EU
  GDP 6bn EUR
• Overall budgetary expense 25-28bn EUR/year

5
Turkish Immigration expectations and fears

• Expected between 1.5 and 4.5mln immigrants in the
  first 10 years of membership
• Fear of depressed wages, higher unemployment in
  all levels, social frictions and political
  upheavels

6
Turkish Immigration real economic effects

• Complementary work force - highly skilled local
  workers complemented by unskilled immigrants
• Highly skilled immigrants are acting as economic
  boosters
• No change in the job opportunities
• Increased wages for the high-skilled spheres
• old Europe needs fresh work force due to the
  demographic crisis

7
Turkish Immigration Demographic Effect
8
Turkish Economy

• GNI/capita close to Bulgaria and Romania in 2000
• Economic disparities across the territory
• Large rural population
• Large agricultural sector
• Lack of diversified investment

9
Turkish Economy
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Turkish Economy
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EU-Turkish Trade

• For Turkey, the EU is a major trade partner,
  mainly in agriculture
• 70 is with preferential treatment without import
  barriers and duty free
• Only CAP-sensitive goods do not receive
  preferential treatment
• Tariff-quota schemes
• A future accession would create a more
  competitive market, better quality of the goods
  and a more flexible price system

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EU-Turkish Trade
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Foreign Direct Investment

• 15 FDI/capita in 2000, in Poland it was 256
  FDI/capita
• bureaucratic barriers
• high levels of corruption
• extensive regulation

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Positive Characteristics of the Accession

• Use of EU funds in Turkey for major projects
• Higher FDI levels
• Decreased unemployment
• Increased competitiveness
• Stabilization of the economy
• Attractive market for the EU companies 70
  million consumers
• A strategic position connected to crude oil and
  natural gas networks
• Fresh labor force

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Bibliography

• Harry Flam - Turkey and the EU Politics and
  Economics of Accession, 2004
• Daniel Gros - Economic Aspects of Turkeys Quest
  for EU Membership, 2005
• Stéphanie Jung and Stanislav Kubacek - Economic
  Aspects of Turkeys Accession to the EU - How
  Turkeys Membership is Challenging the EU, 2005
• Dr. Bahadir Kalegasi - What Turkey Could Bring to
  the EU, 2004
• UNCTAD, 2002
• Eurostat, 2006
• The World Bank, 2006
• European Commission data
• International Monetary Fund, 2004
• US Census Bureau, 2005

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Thank you for the attention