Towards Intellectual Capital Report of Turkey Kamil Yılmaz Koç University January 29, 2009

Towards IC Report for Turkey - 2 Intellectual Capital uAll intangible organizational resources uProviding relative advantage uProduce future benefits

Towards IC Report for Turkey - 3 Components of Intellectual Capital uIntellectual capital of a nation is the product of three different classes of intangibles: uHuman capital – knowledge, education and competencies uStructural capital – non-human storhouses of knowledge uRelational capital – intraorganizational relationships

Towards IC Report for Turkey - 4 Intellectual Capital uAssets (present) – current power; an overview of current main assets uInvestment (future) – future power; investment in its potential continously uEffects (past) – intangibles productive in the past period

Towards IC Report for Turkey - 5 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%

Towards IC Report for Turkey - 6 Turkey – Major Economic Indicators

Towards IC Report for Turkey - 7 FDI Inflows

Towards IC Report for Turkey - 8 Infrastructure-related Factors Adversely Effecting Turkey’s Competitiveness TurkeyPoland Czech Rep. Hungar y 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

Towards IC Report for Turkey Agriculture Industry Service Sector Shares in GDP*, period average, % % % Enterprises in Manufacturing Employment in Manufacturing  The share of agriculture in GDP and employment declines constantly.  Employment share of agriculture is still very high.  Turkish industrial structure is characterized by a majority of small and medium sized enterprises. Output and Industrial Structure Agriculture Industry Service Sector Shares in Employment

Towards IC Report for Turkey - 10 Kişi Başına GSYİH Büyüme Oranı, (5-yıl hareketli ortalama)

Towards IC Report for Turkey - 11 HC Indicators for Turkey IndicatorsSourceStart Year End Year *HCA_1: Proportion of total population having completed at least upper secondary education EUROSTAT, OECD HCA_2: Proportion of active population using a computer for professional purposes that had computer training HCA_3: Proportion of the adult population aged 25 to 64 participating in education and training EUROSTAT HCA_4: Researchers per thousand of employmentWORLDBANK HCA_5: Employment rateEUROSTAT *HCA_6: Employment in Knowledge intensive services and High tech & medium - high tech manufacturing EUROSTAT HCI_1: Total expenditure on education as % of GDPEUROSTAT HCI_2: Total public expenditure on labor market policy measures as % of GDP *HCE_1: GDP per hour worked (as % of US)OECD HCE_2: Value added of knowledge intensive services, relative to GDP

Towards IC Report for Turkey - 12 SC Indicators for Turkey SCA_1: Percentage of households who have Internet access at home EUROSTAT SCA_2: Percentage of enterprises who have access to InternetTURKSTAT SCA_3: Number of patent applications to the European Patent Office (EPO) per million inhabitants EUROSTAT SCA_4: Number of patent applications to the US Patent and Trademark Office (USPTO) per million inhabitants EUROSTAT SCA_5: Number of scientific publications per million inhabitantsWorld Competitiveness Yearbook *SCA_6: Enterprise environment indicator from World Economic Forum World Competitiveness Yearbook *SCA_7: Entrepreneurial attitudeTURKSTAT SCA_9: Time required to start a new businessWORLDBANK *SCA_10: Venture Capital Investment as % of GDPWorld Competitiveness Yearbook SCA_11: Number of EU directives not notified SCA_12: General government consolidated gross debt as a percentage of GDP EUROSTAT

Towards IC Report for Turkey - 13 SC Indicators for Turkey SCI_1: Gross domestic expenditure on R&D as of GDPEUROSTAT, OECD SCI_2: Expenditure for IT hardware, equipment, software and other services as a percentage of GDP SCE_1: Percentage of businesses using the Internet for purchasing and selling TURKSTAT2005 SCE_2: Birth rate of enterprises *SCE_3: The share of persons with an equivalised disposable income below the risk-of-poverty threshold EUROSTAT *SCE_4: Value added of high tech industry, relative to GDP TURKSTAT SCE_5: Life expectancy at birthOECD

Towards IC Report for Turkey - 14 RC Indicators for Turkey RCA_1: Percentage of international meetings hosted RCA_2: SMEs involved in innovation co-operation *RCA_3: Foreign students as percentage of all students World Competitivene ss Yearbook *RCA_4: international outgoing telecom trafficEUROSTAT RCE_1: Breadth of international scientific collaboration RCE_2: Percentage of patents with foreign co- inventors RCE_3: Export of royalty and license fees RCE_4: Export of servicesEUROSTAT RCE_5: High tech exportEUROSTAT

Towards IC Report for Turkey - 15 Substitute Indicators

Towards IC Report for Turkey - 16 Human Capital Assets *HCA_1: Proportion of total population having completed at least upper secondary educationEUROSTAT, OECD HCA_3: Proportion of the adult population (25-64) participating in education and trainingEUROSTAT HCA_4: Researchers per thousand of employmentWORLDBANK HCA_5: Employment rateEUROSTAT *HCA_6: Employment in Knowledge intensive services and High tech & medium - high tech manufacturing EUROSTAT

Towards IC Report for Turkey - 17 Structural Capital Assets - I SCA_1: Percentage of households who have Internet access at homeEUROSTAT SCA_3: Number of patent applications to EPO per million inhabitantsEUROSTAT SCA_4: Number of patent applications to USPTO per million inhabitantsEUROSTAT *SCA_6: Enterprise environment indicator from World Economic ForumWorld Competitiveness Yearbook SCA_9: Time required to start a new businessWorld Bank *SCA_10: Venture Capital Investment as % of GDPWorld Competitiveness Yearbook SCA_11: Number of EU directives not notifiedNA

Towards IC Report for Turkey - 18 Structural Capital Assets - II SCA_2: Percentage of enterprises who have access to InternetTURKSTAT SCA_5: Number of scientific publications per million inhabitantsWorld Competitiveness Yearbook *SCA_7: Entrepreneurial attitudeTURKSTAT SCA_12: General government consolidated gross debt - percentage of GDPEUROSTAT

Towards IC Report for Turkey - 19 Structural Capital Effects

Towards IC Report for Turkey - 20 Net and Gross National Income (PPP current dollars, 2006)

Towards IC Report for Turkey - 21 Triadic Patent Families - SCA (Granted by EU, US, Japan )

Towards IC Report for Turkey - 22 Expenditure on R&D - SCI (% of GDP, 2006)

Towards IC Report for Turkey - 23 Turkey/OECD - SCI R&D Expenditure as a percentage of GDP

Towards IC Report for Turkey - 24 Number of Researchers per 1000 employed - HCA (2006)

Towards IC Report for Turkey - 25 Researchers (Turkey / OECD, HCA)

Towards IC Report for Turkey - 26 Households with access to a home computer - SCA ( As a percentage of all households, 2006 )

Towards IC Report for Turkey - 27 Tertiary Type-A Graduation Rates* - HCA * Percentage of tertiary-type A graduates to the population at the typical age of graduation

Towards IC Report for Turkey - 28 Tertiary attainment rates (25-64, HCA) ( As a percentage of the population of that age group, 2005)

Towards IC Report for Turkey - 29 Total expenditure on educational institutions for all levels - HCI (As a percentage of GDP)

Towards IC Report for Turkey - 30 Unit labour costs, business sector (Average annual growth in percentage, )

Towards IC Report for Turkey - 31 Inflows of foreign direct investment - RCI (billion US dollars, average )

Towards IC Report for Turkey - 32 Ratio of the inactive elderly population aged 65 and over to the labour force (%)

Towards IC Report for Turkey - 33 Employment in manufacturing and services in affiliates under foreign control- RCE (As a percentage of total employment, 2005)

Towards IC Report for Turkey - 34 Turkey’s Participation in the European Knowledge Economy