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Intellectual Capital of Turkey Kamil Yılmaz Koç University TEPEK National Event Bilkent University, Ankara Bilkent University, Ankara October 9, 2009.

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Presentation on theme: "Intellectual Capital of Turkey Kamil Yılmaz Koç University TEPEK National Event Bilkent University, Ankara Bilkent University, Ankara October 9, 2009."— Presentation transcript:

1 Intellectual Capital of Turkey Kamil Yılmaz Koç University TEPEK National Event Bilkent University, Ankara Bilkent University, Ankara October 9, 2009

2 Turkey’s Participation in the European Knowledge Economy

3 Value of Intellectual Capital

4 Value of Intellectual Capital

5 Value of Intellectual Capital

6 ASSETS Human capitalStructural capitalRelational capital HCA-1: youth educational attainment (20-24) HCA_2: population with tertiairy education HCA_3: occupations and skills in the information economy HCA_4: PISA scores HCA_6: drop outs HCA_5: Life expectancy at birth SCA_1: Broadband penetration SCA_3: scientific publications SCA_4: patent applications SCA_5: patents in environment-related technologies SCA_2: Entrepreneurship - Birth and Death Rates of enterprises SCA_6: Electricity generated from renewable sources SCA_7: Venture capital investments - early stage SCA_8: Venture Capital RCA_1: Innovative SME’s co-operating with others RCA_2: collaboration with public research organizations by innovating firms RCA_3: international collaboration in science RCA_4: foreign collaboration on innovation

7 INVESTMENT Human capitalStructural capitalRelational capital HCI_1: investment in knowledge HCI_2: expenditure on education per student HCI_3: expenditure on education as percentage of GDP HCI_4: participation in life-long learning HCI_5:adult training SCI_1: Gross domestic expenditure on R&D SCI_2: public investment in R&D SCI_3: private investment in R&D SCI_5: SME’s innovating in house SCI_6: ICT expenditures SCI_7: SME’s using organizational innovation SCI_8: non-technological Innovation SCI_4: Business investment RCI_1: government financed business R&D RCI_2: foreign funding of R&D RCI_3: foreign business investments RCI_4: Business-funded R&D in the higher education and government sectors RCI_5: private investment in education

8 EFFECTS Human capitalStructural capitalRelational capital HCE_2: employment rate HCE_3: employment rate of older workers HCE_4: employment rate of women HCE_1: GDP per capita in Purchasing Power Standards SCE_1: Labour productivity SCE_2: Total greenhouse gas emissions SCE_3: Energy intensity of the economy SCE_4: Total primary energy supply per capita RCE_1: number of foreign students RCE_3: number of international researchers RCE_5: % patents with foreign co-inventors

9 Value of Intellectual Capital – 2007 Assets

10 Value of Intellectual Capital – 2007 Investments

11 Value of Intellectual Capital – 2007 Effects

12 d) HCA5 Life expectancy at birth (2001, 2005) Number of years a) HCA_1 Youth education attainment level (2001, 2007) Percentage of the population aged 20 to 24 having completed at least upper secondary education b) HCA2 Tertiary-type A graduation rates (2001, 2005) Percentage of tertiary-type A graduates to the population at the typical age of graduation c) HCA4 OECD's Programme for International Student Assessment (PISA; 2000, 2006) Assessment student knowledge & skills at age 15

13 a) HCI2 Annual expenditure on educational inst. per student for all services (1995, 2004) In equivalent US dollars converted using Purchasing Power Parities for GDP, based on full-time equivalents b) HCI3 Expenditure on educational institutions (2000, 2004) In percentage of GDP c) HCI4 Life-long learning (adult participation in education and training) (2001, 2007) Percentage of adult population aged 25 to 64 participating in education and training d) HCI5 Employee Training (2008) Number of hours (Substitution from IMD Competitiveness Yearbook 2009)

14 a) HCE1 GDP per capita in PPS (2001, 2007) GDP per capita in Purchasing Power Standards (PPS) (EU-27=100) b) HCE2 Employment rate of persons aged 15 to 64 (2001, 2007) In percentage of the total population of the same age group c) HCE3 Employment rate of older workers (=aged 55 to 64; 2001, 2007) In percentage of the total population of the same age group d) HCE4 Employment rate of female persons aged 15 to 64 (2001, 2007) In percentage of the total female population of the same age group

15 Turkish Economy - 16th in the World (Tril. USD, 2008) Source: IMF, World Economic Outlook

16 And 6th in Europe.. (Tril. USD, 2008) Source: IMF, World Economic Outlook

17 Turkey’s demographic window of opportunity..

18 Will more or less be wiped out by 2050… Source: Treasury

19 Turkish Economy since 2001 Since 2001 Turkish economy experienced a dramatic recovery Thanks to institutional and macro reforms (e.g., banking reforms, adopting a flexible exchange rate, sticking to fiscal adjustment) A very pragmatic government that has sticked to EU membership goal and the IMF program A very benign international environment for emerging markets (the availability of large sums of international capital flows) However, the supply-side (micro) structural reforms did not follow through, The growth rate started to decline since 2006…

20 Government budget deficit declined substantially since

21 Thanks to sustained fiscal discipline public sector debt stock declined substationally since 2001 crisis

22 Conquest of inflation

23 Conquest of inflation thanks to fiscal discipline..

24 Interest rates (%)

25 R&D Expenditure per capita (USD, PPP)

26 R&D Human Resources (1000)

27 Number of Scientific Publications (per million people)

28 International Patent Applications

29 But increased difficulty in sustaining high growth rates recently

30 Share of Agriculture in employment declined dramatically since 2002 …

31 Unemployment increased to a higher plateau after the 2001 crisis, and yet another one after the global crisis…

32 Turkish growth is driven by domestic demand… Source: Treasury

33 Trade deficit continued to rise

34 Current account deficit financed by capital inflows…

35 The rapid increase in CA deficit is also due to rapidly increasing energy prices since 2002

36 Since 2001 composition of Capital Inflows changed for the better… Source: Treasury

37 Since Dec a tremendous increase in FDI inflows

38 Recent Performance of Sectors (groups based on technology intensity) (Compounded Annual Average Rate of Change)

39 Crisis and Worldwide Recession

40 Post-1990 Crises – Impact on Turkish Trade u1994 (January 1994) u2001 (January 2001) u2008 (September 2008)

41 Economic Crises and Imports

42 Economic Crises and Exports

43 Industrial production declined by an average of 16% in the first eight months..

44 Since the beginning of the crisis a dramatic shift in balance of payments…

45 Since the beginning of the crisis, a shift from traditional markets to new markets

46 Exports to developed markets plunged down as these countries faced recession The share of EU decreased to 48% from 56%. The share of Near and Middle East rose to 19% from 14%. In the first four months of the year exports rose by 68.2% to this group which includes Egypt, Afghanistan, Iraq, Bangladesh, Algeria, Yemen, Turkmenistan, Libya, Syria, Lebanon

47 The heavy burden of the crisis on Turkish economy uImpact through the trade and finance channels. uCollapse of the EU demand led to 35% decline in exports, uAs the Euro Area economy is expected to shrink around 4% in 2009, the demand for Turkish exports will stay weak, uTurkish economy is likely to contract in double digits in the first quarter, and more than 6% in 2009 uGovernment has recently taken a series of fiscal policy actions uMonetary policy turned into expansionary gear rapidly uWould they be sufficient to bring Turkish economy out of the woods?

48 After the crisis: Slow recovery for the Turkish economy uThe recovery will be slow, thanks to strong headwinds from the trade and finance channels uIIF forecasts sharp decline in private capital flows to EMs in 2009 ($165 bn compared to $920 bn and $465 bn in 2007 and 2008) uNet capital outflows would mean that a strong pick up in domestic demand is unlikely in uThe fiscal deficit is worsening rapidly raising doubts about the sustainability of public sector debt in the long run

49 Thank You

50 Indeed Turkey unable to sustain high growth rates since 1940s

51 Turkey – Demographic Indicators (2008) Land Area (km²) 774,820 Population (Million) 71.5 Rate of Population Growth 1.31% Density (km²) 92.3 Urban Population 62.2% Average Age 28.4 Population Aged % Labor Force (Million) 24.6 Unemployment Rate 10.9% Labor Force Participation 49.1% Female Labor Force Participation 26.2%

52

53 Turkey – Major Economic Indicators

54 Factors adversely effecting Turkey’s Competitiveness TurkeyPoland Czech Rep. Hungary Share of high technology export (%, 2006) Ratio of illiterates (%, + 15 age, 2005) Pupil/teacher ratio in primary education (%, 2005) Telecommunication investments (ratio to GDP, 2006) Number of internet users (per 1000 population, 2007) Electricity cost in industry ($/kwh, 2006) Human Development Index (2005) Number of computers (per 1000 population, 2007) Life expectancy at birth (2005) R&D investments (USD per capita, 2006) Source: IMD World Competitiveness Report, 2008

55 HCA6 Early school leavers (2001, 2007) Percentage of the population aged with at most lower secondary education and not in further education or training

56 a) SCA1 Broadband penetration rate ( ) Number of broadband access lines per 100 inhabitants b) SCA3 Scientific articles ( ) Number of articles per million population c) SCA4 Patent applications to the European Patent Office (EPO) ( ) Number of applications per million inhabitants d) SCA5 Countries' share in environment-related technology patents filed under Patent Co-operation Treaty (2004) In percentage

57 a) SCA6 Electricity generated from renewable sources ( ) In percentage gross electricity consumption b) SCA8 Venture Capital ( ) being easily available for business development maximum number is 7,85) c) SCI1 Gross domestic expenditure on R&D (GERD) ( ) In percentage of GDP d) SCI2 Gross domestic expenditure on R&D financed by government ( ) Percentage of R&D expenditure financed by government

58 a) SCI3 Gross domestic expenditure on R&D financed by industry ( ) Percentage of R&D expenditure financed by industry b) SCI4 Business investment ( ) Gross fixed capital formation by the private sector as a percentage of GDP c) SCI5 In-house innovations SME's (2004) As a percentage of all SME's d) SCI6 ICT expenditure (2004) In percentage of GDP

59 a) SCI7 SME's using organizational innovation (2004) In percentage of all SME's b) SCI8 Non-technological innovation by size and sector of firms (2008) As a percentage of all firms c) SCE1 Labour productivity per person employed ( ) GDP in Purchasing Power Standards (PPS) per person employed relative to EU-27 (EU-27 = 100) d) SCE2 Total greenhouse gas emissions ( ) Index of greenhouse gas emissions and targets - In CO2 equivalents (Actual base year = 100)

60 a) SCE3 Energy intensity of the economy ( ) Gross inland consumption of energy divided by GDP (kilogram of oil equivalent per 1000 Euro) b) SCE4 Total primary energy supply per capita (2006) Tonnes of oil equivalent (toe) per capita c) RCA1 Innovative SME's co-operating with others (2008) In percentage of all SME's d) RCI1 Government-financed R&D in business ( ) In percentage of R&D performed in the business sector

61 a) RCI2 Gross domestic expenditure on R&D financed by abroad ( ) Percentage of R&D expenditure financed by abroad b) RCI3 Foreign Direct Investments inflows (2005) In percentage of GDP c) RCI4 Business-funded R&D in the higher education and government sectors ( ) As a percentage of R&D performed in these sectors (combined) d) RCI5 Public-private investment in education ( ) Share of public expenditure on educational institutions (%)

62 a) RCE1 Foreign students ( ) Number of foreign students in tertiary education, per 1000 inhabitants b) RCE3 International Researchers Total R&D personnel and Researchers as % of labour force and total employment c) RCE5 International co-operation in research - Patents with foreign co-inventors ( ) Patent applications with at least one foreign co-inventor, as a percentage of total patents invented domestically


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