© Oxford University Press 2014 Series 33, Issue 1, September 2014 1

Turkey: A bridge between Europe and AsiaBy Paul Wraight

SynopsisIn a rapidly globalising world, Turkey’s strategic position, fast-growing economy and young population are combining to make it an important regional power.

Turkey’s economic growth over the last three decades has been underpinned by government action to promote a stable economic environment and improved regional links.

Turkey has excellent connections to growing markets (the Middle East, Central Asia and North Africa). ‘Switching on’ to a globalising world economy is an important factor in Turkey’s economic success and increasing regional infl uence.

Turkey’s population structure is well suited to attracting foreign direct investment from foreign transnational corporations and its growing middle class may help encourage political stability. There are also high savings rates in Turkey, creating a pool of domestic savings to fund investment that will continue to increase productivity and incomes.

However, development also depends on loans which will have to be repaid in US dollars; this might be a problem if there is a decline in the value of the Turkish lira.

Key termscultural infl uence, fast-growing economy, foreign direct investment, globalising, newly industrialised country, regional power, strategic position, transit route

Learning objectivesAfter working through this unit you will:

• have a better appreciation of different spatial, cultural and political contexts within which a country is placed

• be able to identify important links and interrelationships between places and environments at national and international scales

• have a better contextual understanding of Turkey’s contemporary global signifi cance

• understand the changing nature of industry and investment, and the characteristics of international trade.

Exam Board Link to specifi cation

AQA Unit 3 GEOG3 Contemporary Geographical Issues, Human Options, Option 5: Development and Globalisation, Growth in the 21st Century http://fi lestore.aqa.org.uk/subjects/specifi cations/alevel/AQA-2030-W-SP-14.PDF (see page 12)

Edexcel Unit 1 Global Challenges Topic 2: Going Global; Unit 1, Globalisation, Unit 2 Global groupings, Unit 3 Global networks http://www.edexcel.com/migrationdocuments/GCE%20New%20GCE/UA035234_GCE_Lin_Geog_Issue_4.pdf (see pages 26–28)

OCR A2 Unit F763 Global Issues, Globalisation, Option B2; Development and Inequalities, Option B3 http://www.ocr.org.uk/Images/69036-specifi cation.pdf (see pages 41–44)

WJEC Unit G3 Section A Contemporary Themes and Research in Geography http://www.wjec.co.uk/uploads/publications/6312.pdf (see pages 36–39)

CCEA Unit AS 2 Human Geography, Section B, 3(a) The nature and measurement of development; 3(b) Issues of development http://www.rewardinglearning.org.uk/qualifi cations/results.aspx?g=1&t=1&c=R&s=0&v=0&f=0&q=182&d=d (see pages 15–16)

International

Baccalaureate

Geography Diploma Programme, Paper 3 – HL Extension – Global Interactions http://www.ibo.org/diploma/curriculum/group3/geography.cfm There are seven compulsory topics in the HL extension

719GEOFILE

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GEOFILE ● 719

Turkey: A bridge between Europe and AsiaTurkey is positioned at the

crossroads of two continents:

Europe and Asia. This Geofi le will

assess how in a rapidly globalising

world the country’s strategic

position, the diplomatic initiatives

of the government, its fast growing

economy and young population are

combining to make Turkey an

important regional power

(Figure 1).

Geography of TurkeyFigure 2 shows Turkey located at

the junction of fi ve regions.

Turkey’s future is intricately linked

to increasing trade and cooperation

with these neighbours. Turkey

began expanding its infl uence to

the east following the collapse of

the old Soviet empire in the 1990s.

Ten years ago 60% of Turkey’s

exports went to the EU. Following

the eurozone crisis and the debt

crisis in the west, Turkey had to

actively build new markets in

Africa, the Middle East, the Gulf

region and India. Today, only 30%

of Turkish exports go to the EU. The

country’s top export markets are

now Germany, Russia and Iran

(Figure 3). Erdem Ba çı, Turkey’s

central bank governor, has

predicted that Iraq will eventually

become Turkey’s largest export

market.

European Union

To the north west lies the European

Union. The EU is an economic and

political union of 28 member states

with a population of over 500m.

Most countries in the EU are very

wealthy with advanced economies.

GDP per capita for the EU was

$34,023 in 2013. The EU provides

Turkey with a market for

manufactured goods. It is an

historic destination for Turkish

migration, in particular Germany.

The EU is an important cultural

infl uence on Turkey.

Turkey has been an associate

member since 1963, and applied for

full membership of the EU in 1987.

Membership talks began formally in

2005, but enlargement of the EU to

include Turkey is resisted by some

members of the EU. However, a

customs union was established in

1995. This means many goods can

travel between the two entities

without any customs restrictions

(there are certain exceptions such

as agriculture, services and public

procurement). Moreover, in 1996 a

free trade area was established

between Turkey and the European

Union for coal and steel.

Russia

To the north lies Russia, with a

population of 143m. Russia is very

rich in resources, especially oil and

gas, and is re-emerging as a world

power, following the collapse of the

Soviet Union in the 1990s. In 1998,

40% of Russians lived below the

poverty line. Today that fi gure is

less than 13%. The middle class is

expanding steadily. The 2008 global

Figure 1 Turkey fact fi le

Capital City Ankara

Size 783,562 km2 (37th largest country in the world)

Population 77m in 2013 (18th largest in the world)

GDP $1.4 trillion in 2012 (15th largest in the world)

GDP per capita $18,348 (54th highest in the world)

Major language Turkish (offi cial), Kurdish, other minority languages (7–12% of total population)

Major religion Muslim 99.8% (mostly Sunni), other 0.2% (mostly Christians and Jews)

Life expectancy 71 years (male), 75 years (female)

Main exports Clothing, textiles, foodstuffs, metal manufactures, transport equipment

Figure 2 Turkey and its immediate neighbours

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Turkey: A bridge between Europe and Asia ● 719GEOFILE

recession was short-lived for Russia,

compared to the EU. Its economy

has expanded every year since and

Russia is now the world’s eighth-

largest economy. The Russian

government has said $1 trillion will

be invested in infrastructure by

2020. This is an important market

for Turkish companies.

Central Asia

To the east lies Central Asia. There

is considerable instability in some

parts of Central Asia, such as

Afghanistan. However, Turkish

companies have been providing

construction and management

services to NATO there, and

continues to benefi t from

reconstruction work in the region.

Three of the world’s 20 fastest-

growing countries in 2012 were in

this region (Afghanistan,

Uzbekistan and Turkmenistan).

Moreover, Turkey is an important

transit route for Russian, Iranian

and Central Asian oil and gas.

There are currently four major

pipelines passing through the

country, of which the Baku–Tbilisi–

Ceyhan (BTC) pipeline is a good

example (Figure 4). Nabucco, a fi fth

major pipeline from Turkey to

Austria, is currently being planned.

The Middle East, the Gulf States

and India

The Middle East, the Gulf States and

India are also important neighbours

for Turkey. Turkey is heavily

involved in diplomatic initiatives in

the region. For example, the civil

war in Syria has resulted in 400,000

refugees being housed in camps

along its shared border. Turkish

businesses are deepening their ties

with the Gulf States. Furthermore,

in 2013 Turkey and India signed 11

new cooperation agreements in

education, broadcasting and

scientifi c research.

Africa

Economic and political ties between

Turkey and Africa have been

deepening ever since the Turkish

government declared 2005 ‘the year

of Africa’. Turkey now has embassies

in 30 African countries. Turkey’s

trade volume with African countries

has increased considerably, jumping

from $4bn in 2000 to $17bn as of

2011. Moreover, Turkish troops are

active in six ongoing peace-keeping

operations in Africa. Despite the

upheavals of the Arab Spring in

northern Africa, nine of the world’s

20 fastest growing economies in 2012

were African: Libya, Sierra Leone,

Niger, Cote d’Ivoire, Burkina Faso,

Chad, Ethiopia, Liberia and Rwanda.

Turkish business is benefi ting from

this developing partnership.

The role of government Turkey’s economic growth over the

last three decades has been

underpinned by government action

to promote a stable economic

environment and improved regional

links. Prior to this, the republic had

a volatile history. As shown in

Figure 5, the main thrust of the

reforms involved government

stepping back from funding and

running companies, exposing

companies to competition. As a

result productivity and customer

Figure 3 The destination of Turkey’s exports and origin of its imports (2011)

Figure 4 Baku–Tbilisi–Ceyhan (BTC) pipeline

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Turkey: A bridge between Europe and Asia ● 719GEOFILE

service improved. The government’s

attempts to join the EU are ongoing,

but a valuable trading relationship

has been developed.

Brief history

By the beginning of the 20th

century, the Ottoman Empire had

been in decline for centuries. It

fought on the side of Germany and

Austria-Hungary in the First World

War and collapsed following its

eventual defeat. The remnants

of the empire were briefl y

administered by the victorious Allied

Powers but the Turkish National

Front won the Turkish War of

Independence against the Allies in

1922. As a result the Republic of

Turkey was established in 1923.

Mustafa Kemal Atatürk, the

Republic’s fi rst president, launched a

series of political, legal, cultural,

social and economic policy changes

that were designed to create a

secular, modern nation-state. Central

to these reforms was the belief that

Turkish society would have to

westernise itself both politically and

culturally in order to develop.

Economic reforms

During the fi rst 60 years the

government sought to plan the

economy. There were limitations on

the actions of private companies,

foreign trade, foreign currency

exchange, and foreign direct

investment. However, in 1983

Prime Minister Turgut Özal initiated

a series of reforms designed to shift

the economy from this insulated

system to a more private-sector,

market-based model.

The reforms, combined with

unprecedented amounts of foreign

loans, spurred rapid economic

growth of 4% per annum between

1981 and 2003. However, an overly

complex taxation system, combined

with large and growing public

sector defi cits and widespread

corruption, resulted in high

infl ation, a weak banking sector

and an economic crisis in 2001.

Further reforms were carried out by

fi nance minister Kemal Dervis,

including the relaunch of the

Turkish currency, the ‘New Turkish

Lira’, in 2005. As a result, infl ation

fell to single-digit numbers, investor

confi dence and foreign investment

have soared, and unemployment

has fallen. The currency was

renamed, ‘Turkish Lira’ in 2009.

During this period, Turkey

gradually opened up its markets

through economic reforms by

reducing government controls on

foreign trade and investment and

the privatisation of publicly owned

industries.

Politics

The Justice and Development Party

(AKP) has been in government

since 2002. Its leader, Recep Tayyip

Erdo an, is Prime Minister, while

fellow former party member and

PM Abdullah Gül is President.

Founded in 2001 by members of a

number of existing conservative

parties, the party won a landslide

victory in the 2002 election,

winning over two-thirds of

parliamentary seats. In 2011, the

AKP further increased its share of

the popular vote to 49.8% and

secured 327 parliamentary seats to

form a third consecutive majority

government. The AKP portrays

itself as a pro-Western and pro-

American party that advocates a

liberal market economy, including

Turkish membership of the

European Union. This government

has long been seen as moderate and

welcoming for foreign direct

investment.

The Turkish economy At $1.4 trillion, Turkey’s GDP is the

15th largest in the world. It grew at

an average rate of 5.2% a year

between 2002 and 2011. The OECD

has forecast that the economy will

continue to grow on average by

6.2% per year until 2017. Turkey is a

newly industrialised country (NIC).

One half of economic activity in

Turkey is classed as service industry,

one quarter secondary industry and

one quarter agriculture and mining.

The main industries in the country

include textiles, food processing,

vehicles, electronics, tourism,

mining (coal, chromate, copper,

boron), steel, petroleum,

construction, timber and paper.

Tourism in Turkey has experienced

rapid growth in the last 20 years,

and constitutes an important part of

the economy. In 2012, 35.5 m

foreign visitors arrived in Turkey,

which ranked as the 6th most

popular tourism destination in the

world. These visitors contributed

$25.6bn to Turkey’s economy.

Alongside tourism, there are two

main drivers of economic growth in

Turkey. First, Turkey has a number

of home-grown industries and

companies that are developing their

own technology and expanding

globally. Secondly, Turkey is

attracting foreign direct investment

from TNCs that are driving

improved productivity though

technology transfer.

2013 Taxsim Square protests

2005 Relaunch of Turkish currency

2002–4 Dervis reforms to control infl ation

2001 Turkish economic crisis

1995 EU-Turkey Customs Union established

1983 Özal Reforms to create market economy

1923 Republic of Turkey established

Figure 5 Timeline of economic reforms

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Turkey: A bridge between Europe and Asia ● 719GEOFILE

Domestic TNCs

Key sectors for Turkish TNCs

include consumer electronics, the

automotive industry, textiles and

ship-building. BEKO and Vestel are

Turkish TNCs operating in the

consumer electronics sector. Turkey

now produces 50% of the TVs, 18%

of the white goods and 15% of the

digital devices sold in Europe.

Turkey had clothing exports worth

$13.98 bn in 2006. In 2008 Turkey

produced 1,147,110 motor vehicles,

ranking as the sixth largest

producer in Europe and the 15th

largest in the world. Turkish

companies like TEMSA, Otokar and

BMC are among the world’s largest

van, bus and truck manufacturers.

Turkey is also one of the world’s

leading shipbuilding nations. In

2007 Turkish shipyards ranked

fourth in the world (behind China,

South Korea and Japan) in terms

of the number of ordered ships,

and also fourth in the world

(behind Italy, USA and Canada)

in terms of the number of ordered

mega-yachts.

Foreign direct investment

Turkey entered into a customs

union with the European Union in

1995. This means goods can travel

between the two without customs

restrictions. This is a key attraction

for TNCs that locate in Turkey. They

can benefi t from lower labour costs

(relative to EU countries) and still

sell into the EU market of 500m

wealthy consumers. Turkey’s

excellent connections to growing

markets (Iraq, Central Asia and

North Africa) are also very

important in attracting FDI.

Global network theory

Geographers use networks to study

the connections that exist between

different places. A place that is

connected is called a node.

Connections between nodes are

called fl ows. Nodes which have

many connections to other nodes

are called hubs. It has been proven

that the greater the quantity and

quality of connections the greater

the potential economic

development. Turkey has been

actively improving the quality and

quantity of its domestic and

international connections. This

process of ‘switching on’ to a

globalising world economy is an

important factor in explaining

Turkey’s economic success and

increasing regional infl uence.

PopulationA fi nal factor that helps explain

Turkey’s recent success is its young

population and skilled, growing

middle class. According to

government estimates in 2011, over

two thirds of Turks are aged 15–64.

One quarter of the population is

aged 14 or under. Only 7% of Turks

are aged over 65. 71% of Turks live

in urban areas. This population

structure is ideal for attracting FDI

from foreign TNCs and a growing

Case Study – BEKOBeko was established as a food canning business in 1950, but moved into white goods in the early 1980s. At this time Turkey began to open up its economy and BEKO also looked abroad to new markets. The company embraced the goal of ‘Being a World Brand’. Today, Beko branded products are sold every two seconds in over 100 countries. It has 14 production plants in fi ve countries and employs 22,000 staff. BEKO has its own in-house research facility. It has developed the machinery and technology for highly productive factories. It also owns the technology for its white goods, and doesn’t have to pay high fees to use the technology of others.

Case Study: Turkish Airlines

Turkish airlines is the world’s fastest-growing carrier. It operates scheduled services to 41 domestic and 202 international airports in Europe, Asia, Africa, and the Americas. With 243 destinations, the airline is the fourth-largest carrier in the world by number of destinations. Its growth underpins the connections that Turkey is building in its neighbouring regions. This eases the way for Turkish trade. As a result, the Turkish government is building a new airport in Istanbul. It will be the largest in the world, with a capacity of 150m passengers annually.

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Turkey: A bridge between Europe and Asia ● 719GEOFILE

middle class may help encourage

political stability. Economic growth

in Turkey’s fi ve neighbouring

regions means more opportunities

for young Turks, who are thinking

globally. The history of Turkey is of

an entrepreneur culture trading

along the old Silk Road. Turkey is

an oriental country, which is

comfortable with western culture.

This has been called ‘Islamic

Calvinism’: moderate Islamic faith

combined with a strong work ethic.

There were only two shopping

centres in Turkey in 1994, but now

there are 300. This shows how

consumer culture is driving

domestic growth. However there

are also high savings rates in

Turkey, which is creating a pool of

domestic savings to fund

investment that will continue to

increase productivity and incomes.

Concerns for the futureIn May 2013 protests contesting the

development of Istanbul’s Taksim

Gezi Park rocked Turkey. The protests

were sparked by outrage at what

protestors perceived as a brutal

eviction of a sit-in at the park.

Subsequently, supporting protests

and strikes took place across Turkey

raising a wide range of concerns, at

the core of which were issues of

freedom of the press, of expression,

assembly, and the government’s

encroachment on Turkey’s

secularism. Commentators have

begun to ask questions about political

stability in Turkey, in particular about

feuding within the ruling AKP.

Moreover, Turkey has a high

current account defi cit, funded by

borrowing US dollars. US dollars

are currently cheap due to

quantitative easing in the USA

(printing money to support

economic growth). However, these

loans will have to be repaid in US

dollars, which might be a problem

if there is a decline in the value of

the Turkish Lira.

SummaryTurkey is located at the crossroads

of fi ve regions: Europe, Russia,

Central Asia, Gulf/Subcontinent

and North Africa. Turkey has begun

to benefi t from strong trade and

diplomatic links with all fi ve

regions. It has been able to do so

because of government reforms to

modernise its economy and

improve its international

connections. Strong domestic

investment from emerging Turkish

TNCs has driven economic growth.

An openness to foreign direct

investment has helped to accelerate

this growth. Turkey’s young

population and growing middle

class provide a sound demographic

base for future prosperity. However,

there are concerns for the future.

Recent protests against the ruling

AKP suggest that political stability

may not last. The protests also hint

at underlying problems of

corruption and authoritarian

government. Moreover, all

emerging economies are vulnerable

to exchange rate crises as

quantitative easing in the US is

unwound.

Further readingBBC Country Profi le for Turkey

http://www.bbc.co.uk/news/world

-europe-17988453

‘Mint condition: countries tipped as

the next economic powerhouses’

The Guardian http://www.

theguardian.com/business/2014/

jan/09/mint-condition-countries-

tipped-economic-powerhouses

Focus questions

1 Research the geography of a Turkish TNC from its website. What does it sell? Where does it produce its goods? In which markets does it operate?

2 Explain how trade, investment and government reforms have helped Turkey narrow the development gap with its EU neighbours.

3 There are a range of theories that can be used to explain unequal levels of development such as modernisation (Rostow), dependency (Frank) and core/periphery (Myrdal). Which theory best explains Turkey’s recent economic growth and why?

Checkpoint

While you’re reading, consider the following questions:

Summarise Turkey’s geographical position in relation to the European Union and regions elsewhere:

Is its location benefi cial, or otherwise?

What policies has Turkey’s government adopted in order to benefi t from its location?

The Republic of Turkey was established in 1923. How has its economy developed since then?

What do you understand by ‘global network theory’?

What factors other than location are important to Turkey’s future?