Transcript Growth Returned but Challenges Remain

“Turkey: The Role of Small and Medium
Enterprises as the Engine of Economic and
Employment Growth”
1
CARLOS E. PIÑERÚA
COUNTRY SECTOR COORDINATOR, TURKEY
THE WORLD BANK
MARCH 12, 2012, MADRID
Outline of The Presentation
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A Success Story…Is It?
Challenges Remain…Where?
Lessons…for Whom?
A Success Story…..
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“…a good economic performance
and lack of economic problems
which are enjoyed by Turkey at a
time when many European
countries suffer many economic
problems and crises display Turkey
as a shining star here. I’m greatly
proud of this situation.”
From High Inflation to Stability
4
From Stability to Growth
5
Fiscal Consolidation (I)
6
Fiscal Consolidation (II)
7
Open the Economy
8
Willingness to Privatize
9
You Get What You Need
10
Banking Sector Also Key
11
Key Messages:
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 Expansionary Austerity Works.
 Structural Change Needed for
Efficiency and Financing.
 Banking Sector Restructuring a
Must!
 Sometimes It Pays To Be Lucky
Too…
Is Stability Sufficient?
13
How Competitive is Turkey?
14
What are the Challenges?
15
Hiring People a Critical One…
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120
Redundancy Costs in Selected Countries
(weeks of salary, 2009)
100
80
60
40
20
Note: Redundancy costs are defined as the sum of severance
payments after 20 -years service and the cost of prior notification.
Indonesia
Portugal
Turkey
Philippines
Germany
Spain
Mexico
Hungary
France
Czech Republic
Russian Federation
Poland
Bulgaria
Romania
Denmark
0
What is an Investment Climate Assessment?
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The Investment Climate Assessments (ICAs) use the result of a detailed Enterprise
Survey to analyze how different aspects of the investment climate affect the productivity
of enterprises.
Using a standard survey in countries worldwide, the ICA enables comparisons of
investment climate conditions across countries globally
The World Bank has conducted ICAs in 110 countries– including in other large, fast
growing economies such as Brazil, China; India and Chile.
While the responses of individual firms are kept confidential, the aggregate results are
shared widely with all interested parties, available on line at
https://www.enterprisesurveys.org/portal
The analysis of the survey results is complemented by expert assessment in key areas of
the investment climate.
The overall objective is to provide a road map for policy measures and reforms to
improve the investment climate and thus foster economic growth and job creation.
What Ails Companies (I)
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30.0
25.9
25.0
20.0
18.2
17.5
14.7
15.0
9.1
10.0
5.0
3.0
2.5
2.0
2.0
2.0
Customs &
Trade Reg
Corruption
Labor
regulations
0.0
Access to
Finance
Tax Rates
Political
instability
Practices
Informal
Sector
Inadequately
educated
workforce
Electricity
Licenses &
Permits
What Ails Companies (II)
40
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Single most severe investment climate obstacles, by firm size
Micro
35
Small
Medium
Large
33.6
30
26.3
25
20
24.7
24.2
18.6
19.5 19.4
19.1
14.1
15
11.8
18.5
17.7
13.3
15.3 14.6
13.1
14.9
10.6
10
7.5
4.8
5
0
Access to finance
Tax rates
Source: Investment Climate Assessment, World Bank
Political instability
Informal
competition
Inadequately
educated workforce
SMEs at the Heart of the Economy…..
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SMEs Share in Total Employment
%
SME's Share in Value-added at
Total Factor Cost %
Large
Large
Medium
Medium
SMEs
69.9 %
Small
Micro
Micro
0.00
SMEs
55.21 %
Small
10.00
20.00
30.00
40.00
50.00
0.00
10.00
20.00
30.00
40.00
50.00
SME's Share in Total Sales %
Large
SME's Share in Total Gross
Investments %
Large
Medium
SMEs
65.5 %
Medium
Small
SMEs
49.9 %
Small
Micro
0.00
Micro
10.00
20.00
30.00
Source: Turkish Statistical Institute
40.00
50.00
60.00
0
10
20
30
Micro:1-9 Small: 10-49 Medium: 50-249 Large: >249
40
Turkish SMEs are Growing Slower…
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Growth Rate of Turkish SMEs Relative to Other Countries % (2004-2007)
0
Russia
Poland
Ukraine
Romania
ECA
EU-8
EU-10
-2
-4
-6
-8
-10
-12
-14
-7.6-7.7
-8.5
-8.8
-9.8
-10.7
-11.2
-12.7
Small (11-50)
Source: Turkish Investment Climate Assessment, World Bank
-10.8
-11.9
Medium (51-250)
-10.6
-12.4
-9.8
-11.3
Time “Tax” a Critical Issue
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Proportion of Management Time Spent on Government Bureaucracy
27%
30%
25%
19%
20%
15%
10%
9%
9%
Chile
Romania
10%
11%
Czech Rep
Bulgaria
13%
13%
Poland
Hungary
5%
0%
Brazil
Turkey
What is Turkey Doing?
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A new Commercial Code.
Transparency
Accountability
The Importance of Financial Reporting
ECONOMIC GROWTH
Development of
Capital Markets
Job Creation
Private Sector
Growth
Accounting
and
Auditing
Improved
Access to Credit
Financial Sector
Development
Financial Information
Financial
Stability
What Should Turkey Be Doing?
25
Regulatory Reform.
Labor Reform.
Education.
Skills.
Are There Lessons?
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Expansionary Austerity?
Is Stability Enough?
Is It money or Ideas?
Government’s Role?
27
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Thank You
Teşekkür Ederim
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