According to data from the latest “Italian Business in Turkey” outlook published by theEconomic Research Center for Southern Italy and the Med Area, in the last ten years the Turkish economy has presented growth rates of 5,1%.
The picture changes if we consider the per capita GDP, which is well below the European average. Inflation is and will remain at high levels also in the following years, despite the fact that the public debt has values that are far from those of the euro area. Although the population and per capita GDP have grown over the years, the balance of payments shows a high structural deficit (10,4% last year), mainly caused by the trade deficit (in 2011 it was about 76 billion dollars).
But a competitive advantage of the country is represented by the geographical distribution of international trade flows. If the trade flows towards the BRICS (Russia and China, in particular) are higher when compared with those of Germany, the European economy which holds the most intense trade relations with them, the EU is always the most geographically important region, accounting for about 40% of total trade flows. The country with which the Turkish economy maintains the most intense commercial relations is Germany (27 and a half billion euros in trade flows), while Italy occupies the fourth position in terms of importance (16 billion).
In this context, the sectoral flows vary according to the different trading partners. Relations with Germany and China are dominated by mechanical and transport sector. And the same goes for Italy too. Last year, the stock of foreign productive investment in Turkey amounted to about 108 billion euros. A comparison with the major countries of the euro area shows that Turkey occupies a marginal position in this sense, since the total value of inflows is only higher than those in the Greek economy. If the per capita values are taken into consideration, given the large population, the gap with European countries seems to be even greater. Incoming foreign investments amount on average to 1600 euros per capita, a value extremely far from countries such as the Netherlands and Belgium (respectively, around 64000 and 25400 euros), comparable only with that in Greece (1700 euros). Nonetheless, over the last ten years, Productive investment flows in Türkiye more than quadrupled, from 22 to 100,8 billion euros, against an Italian growth that did not go beyond 86,4% in the same period of time. In 2011, added value in Turkey amounted to 500 billion euros, just over a third of that produced in Italy. If we consider the percentage values of the same, the primary sector represents 9% (compared to 2% in Italy), industry 22,3% (in Italy 18,6%), services 63,7% ( against 73,4% Italian). If we consider the entire production structure, 2 and a half million enterprises operate in Turkey (about half of those operating in Italy), with a density of 35 enterprises for every 1000 inhabitants, aggregate profits of 758 billion euros, against 2649 billion generated in Italy. Between 2003 and 2009, the Turkish manufacturing sector recorded an increase in the number of enterprises of 35,8%, with a growth rate of 52,7% and an 18,5% increase in employment. In Italy, the same sector has witnessed a fall in the number of companies of about 18%, profits of 2,8% and employment of 12,6%. although the amount of companies and personnel is about double that of Turkey, where, however, the cost of labor is significantly lower. In the period 2003-2009, the number of businesses operating in Turkey grew by 42,5% (against 5,3% in Italy) and the average density per 1000 inhabitants increased from 26 to 35, against the relative stationary nature of the Italian figure . In the same period, profits increased by 70% (14,4% in Italy), with a growth in turnover of 20,4% (+8,7% in Italy). As a result, in the same years gross investments doubled, while the Italian economy recorded a modest increase by 6,1%, with evident effects on employment, which grew in Turkey by 42,7%, while in Italy by 7,5%.
On the one hand, Italy has a higher stock of productive investments and a higher GDP per capita. On the other hand, the main discriminating factors that attract greater FDI flows to Turkey seem to be lower labor costs, higher productivity and the different production structure. Turkey, in fact, thanks to a industrial strategy aimed at the growth of the mechanical and transport sectors, even if it does not yet represent a market with ample and stable internal demand, due to deficits and inflation, it does however seem to have a competitive advantage in terms of labor costs and productivity. With the consequent growth of productive investment flows of a vertical nature e significant benefits in terms of employment and profits in the sector. Just what Italy now desperately needs.
