Assessment of Trade and Investment Potential Between Turkey and EU's
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European Commission Assessment of trade and investment potential between Turkey and EU’s crsis- struck economies, the neighbouring Member States and Croatia Final Report Project No. 2013/318629 This project is funded by A project implemented by The European Commission HTSPE Limited Areas of expertise Monitoring and Evaluation Monitoring is a continuous process that is integrated into every stage of management within our large programmes such as those in Nigeria, Malawi, Nepal and Kenya. Monitoring is a key management tool that allows us as project managers to manage risk, evaluate achievements, build capacity, deliver lasting results, and maximise Value for Money. Evaluation is about using the data available to make judgements about a programme, its successes and identifying where changes are needed. We have undertaken many successful evaluations, including programmes in Pakistan, Bangladesh, Afghanistan, Nigeria and Liberia. Governance and Democracy Accountability, transparency and fair treatment of all stakeholders help to ensure the sustainability of change initiatives. We build and work with multi-disciplinary teams from the state, civil society, media and private sector agencies to develop integrated solutions to governance issues. We have wide geographical experience of governance and democracy programmes, including those in post-conflict and fragile states. We have worked in countries as varied as Afghanistan, Nigeria, Kyrgyzstan, Tanzania, South Africa, Guyana, Nepal, Moldova, Jamaica and Vietnam. Institutional Reform and Organisational Change These often go hand-in-hand with Governance. We help manage change at every step of the way; from initial policy analysis and public consultation, to building an agreed programme for reform, and then managing adjustments. Our clients in this sector have very broad responsibilities and face radical changes in policy. They have included the National Land Centre in Rwanda; Government of South Sudan; Nepal Ministry of Agriculture and Cooperatives and Nigeria’s Federal Government. HTSPE Limited ThamesfieldHTSPE Limited House BoundaryThamesfield Way House 2 Boundary Way HemelHemel Hempstead Hempstead HertsHerts HP2 HP2 7SR 7SR United Kingdom UnitedTel: +44 Kingdom (0) 1442 202400 Fax: +44 (0) 1442 266438 Tel:Email: +44 [email protected] (0) 1442 202400 Fax:Web: +44 www.htspe.com (0) 1442 266438 Email: [email protected] Web: www.htspe.com IMC Worldwide 64-68 London Road IMCRedhill Worldwide Surrey RH1 1LG 64United-68 London Kingdom Road Tel: +44 (0)1737 231400 Redhill Fax: +44 (0)1737 771107 SurreyEmail: RH1 [email protected] 1LG Web: www.imcworldwide.com United Kingdom EuroTrends Tel:Risanska +44 (0)1737 6 231400 Fax:11000 +44 Belgrade (0)1737 771107 Email:Serbia [email protected] Web:Tel: +381-11-664-23-79www.imcworldwide.com Fax: +381-11-26-56-223 Email: [email protected] EuroTrendsWebsite: www.euro-trends.net Risanska 6 11000 Belgrade Serbia Tel: +381-11-664-23-79 Fax: +381-11-26-56-223 Email: [email protected] Website: www.euro-trends.net (501304) Lead Expert Author, Esra LaGro (PhD) and Trade Expert, Ivan Samson (PhD) This document is prepared by HTSPE Consortium and financed under the European Union (EU) funded project entitled “Assessment of trade and investment potential between Turkey and EU’s crisis-struck economies, the neighbouring Member States and Croatia” (COM 2011/Lot 1- 2013/318629). The contents of this publication are the sole responsibility of HTSPE Ltd and can in no way be taken to reflect the views of the European Union. © 2014, European Commission. CONTENTS LISTS OF TABLES, FIGURES, ABBREVIATIONS ....................................................................................................... I ACKNOWLEDGEMENTS ..................................................................................................................................... XV EXECUTIVE SUMMARY ........................................................................................................................................ X 1. INTRODUCTION ..........................................................................................................................................1 1.1 WHY THIS STUDY HAS BEEN CONDUCTED? ............................................................................................1 1.2 OBJECTIVES AND OVERVIEW OF METHODOLOGICAL FRAMEWORK ..........................................................1 1.3 WHO CAN BENEFIT FROM THIS STUDY? AND, HOW? ...............................................................................3 1.4 BACKGROUND TO ASSESSMENT: GLOBAL VALUE CHAINS, INTERNATIONALIZATION OF SMES, TRADE AND FDI WITHIN EU8 AND TURKEY CONTEXT .....................................................................................................5 2. BILATERAL TRADE RELATIONS BETWEEN EU8 AND TURKEY (I.SAMSON) ........................................................9 2.1 INTRODUCTION ....................................................................................................................................9 2.2 AN OVERVIEW OF ECONOMIC ISSUES BETWEEN EU AND TURKEY ...........................................................9 2.3 MAIN FEATURES OF TURKISH TRADE WITH THE EU ..............................................................................15 2.3.1 The geographic composition of Turkey’s trade and the EU ..............................................................15 2.3.2. The Commodity Structure of the Foreign Trade of Turkey ..............................................................18 2.3.3 Comparison of commodity structures of trade with the EU and with the world .................................19 2.4 BRIEF METHODOLOGY OF CURRENT TRADE ASSESSMENT .....................................................................22 2.5 TRADE PROFILES OF TURKEY WITH THE EU8 AS A WHOLE ...................................................................22 2.5.1. Imports of Turkey from EU8 .......................................................................................................23 2.5.2. Exports of Turkey to the EU8 ......................................................................................................24 2.6 TRADE MATRIX BETWEEN TURKEY AND THE EU8 ..................................................................................26 2.6.1 Exports of Turkey .......................................................................................................................26 2.6.2 EU8’s Exports to Turkey ..............................................................................................................27 2.7 THE CRISIS ANALYSIS ..........................................................................................................................27 2.7.1. The crisis analysis by aggregated Top 20 subsectors ....................................................................27 2.7.2. Crisis Time Performance of the EU8 Countries .............................................................................30 2.8 EU8 COUNTRY ANALYSIS .....................................................................................................................32 2.9 THE VALUE CHAIN APPROACH TO EU8 - TURKEY TRADE .......................................................................44 2.10 TRACKING NICHES OF SMART SPECIALISATION WITHIN FOUR SUBSECTORS .......................................46 3. BILATERAL FDI RELATIONS BETWEEN EU8 AND TURKEY (E.LAGRO) .............................................................57 3.1 FOREIGN DIRECT INVESTMENT, COMPETITIVENESS, AND GLOBAL VALUE CHAINS IN THE EUROPEAN UNION: AN OVERVIEW ..............................................................................................................................57 3.2 GLOBAL VALUE CHAINS AND FOREIGN DIRECT INVESTMENT ................................................................58 3.3 GLOBAL COMPETITIVENESS IN FDI AND GVC PERSPECTIVE: EU MEMBER STATES AND TURKEY ..............61 3.4 WORLD BANK - IFC DOING BUSINESS INDEX IN FDI PERSPECTIVE AS PART OF ASSESSING INVESTMENT CLIMATE (ENABLING ENVIRONMENT) .........................................................................................................65 3.5 BILATERAL FDI BETWEEN EU8 AND TURKEY: EXISTING AND POTENTIAL SYNERGIES .............................66 3.5.1. Bilateral FDI of Turkey with the EU Member States .......................................................................66 3.5.2. An Overview of FDI Flows and Stocks of EU8 and Turkey in Perspective .........................................67 3.5.3. FDI stocks of EU8 and Turkey in Perspective ................................................................................70 i 3.6 TURKEY WITH RISING BUSINESS CONFIDENCE: PARTICIPATION IN GVCS AND FDI POSITION .................................................................................................................................................72 3.7 ITALY .................................................................................................................................................77 3.8 SPAIN .................................................................................................................................................82 3.9 PORTUGAL ..........................................................................................................................................87 3.10 IRELAND ...........................................................................................................................................91