Trade Relations Between Turkey and Kazakhstan on the 25th Anniversary of Kazakhstan’s Independence Nevzat ŞİMŞEK*, Cengizhan CANALTAY** Hayal Ayça ŞİMŞEK*** Kazakhstan and Turkey on the 25th year Abstract anniversary of Kazakhstan’s independence in order to analyze the bilateral economic Since Kazakhstan gained independence in 1992, bilateral relations between Kazakhstan relations in different perspectives such as and Turkey have developed in many spheres. changes in trade amount, trade structure and The warm relations have brought many trade complementarity. business opportunities for both countries. Over 23 years, the amount of exports from Turkey to Kazakhstan have multiplied by 39 times while Key Words imports from Kazakhstan have increased by 110 times. As for Kazakhstan’s investment Kazakhstan, Turkey, Bilateral Trade Relations, sector, Turkey is the fourth largest investor Trade Complementarity Index, Central Asia. country in non-energy sectors, and 17th in terms of capitalization. Moreover, in terms of compatibility regarding the trade structure, it Introduction would be beneficial for Kazakhstan to increase its trade volume as shown with the results of Turkey and Kazakhstan have friendly the trade complementarity index. This research relations in the economic, political and looks at the bilateral trade relations between cultural spheres. Although the bilateral trade relationship between Turkey and Kazakhstan has started with a marginal * Assoc. Prof. Dr., Dokuz Eylul University, volume of US$ 30 million in 1992, Dept. of Economics, İzmir, Turkey; Eurasian continuous growth in trade throughout Research Institute, Almaty Kazakhstan. the 1990s increased the trade volume E-mail: [email protected] ** Eurasian Research Institute, Almaty, to US$ 462 million in 2000, and US$ Kazakhstan. E-mail: [email protected] 3.26 billion in 2010. This number *** Assoc. Prof. Dr., Dokuz Eylül University, subsequently fell to US$ 1.85 billion Dept. of Public Finance, İzmir, Turkey; 1 Eurasian Research Institute, Almaty in 2015, despite both country’s Kazakhstan. leaders having set a goal at the High E-mail: [email protected] Level Strategic Cooperation Council 7 PERCEPTIONS, Spring 2017, Volume XXII, Number 1, pp. 7-28. Nevzat Şimşek, Cengizhan Canaltay, Hayal Ayça Şimşek (HLSCC) meeting on 11-12 October suitable business environment for both 2012 to increase the bilateral trade countries. In addition, in 1996, the volume to US$ 10 billion by 2015.2 “Reciprocal Promotion and Protection of Investments” and in 1997 the “Trade and Economic Cooperation Turkey is the fourth largest Agreement” were signed to increase investor country in non-energy bilateral trade between Turkey and sectors, and 17th in terms of Kazakhstan.4 capitalization. Another important agreement in bilateral relations between Kazakhstan Within bilateral trade relations, and Turkey was the signing of Turkey’s top export products are gold, Action Plan 2012-2015, on the optical instruments, textiles, and implementation of the joint economic metallic structures, and its top import program “New Synergy” in 2012. This products are copper, petroleum gases, program aimed to increase the number zinc, and aluminum. Turkey’s exports of Turkish companies investing in are diverse with a majority of them Kazakhstan. Prior to this agreement, consisting of labor-intensive and both countries agreed in October 2011 difficult to imitate products, while on a memorandum for the creation of a 5 in return, she heavily imports raw joint Kazakh-Turkish industrial zone. 3 materials from Kazakhstan. The share Currently, Turkish firms mainly of the top 10 Turkish export products operate in the food, construction, to Kazakhstan are equal to 36% of hotel management, manufacturing, the total export amount. This statistic and medication-chemistry industries, shows that Turkey’s export goods are providing jobs for more than 15,000 diversified in Kazakhstan-Turkey trade people. Turkey is the 17th largest relations. As for the top 10 import investor in Kazakhstan in terms of products, the figure is 97% of the total capitalization and the 4th biggest import volume. country in terms of non-energy sector investments. As an example of the During the early years of bilateral latter, in 2015 Turkish construction relations, in order to increase the business firms undertook 13 projects with a total potential between the two countries, 6 worth of US$ 808 million. the “Double Taxation Avoidance Agreement” was signed in August 1995 In the political sphere, in the early to relieve companies from an additional 1990s, sentimental discourses shaped burden, thus laying the ground for a Turkey’s approach to the region. In the 8 Trade Relations Between Turkey and Kazakhstan 2000s, by developing more pragmatic historical projects related to the Turkic policies, the relations between the two nations.8 countries in the economic, energy and military spheres further developed. Alongside these bilateral agreements, The Strategic Partnership Agreement Kazakhstan and Turkey are also that was signed in 2009 paved the cooperating under various regional way for strengthening the dynamic and international cooperation efforts development of bilateral relations such as the UN, the Economic between Turkey and Kazakhstan. Cooperation Organization (ECO), the Furthermore, the establishment of the Organization of Islamic Cooperation High Level Strategic Cooperation (OIC), the Organization for Security Council in 2012 has helped to create and Co-operation in Europe (OSCE), an institutional mechanism for further and the Conference on Interaction development of the strategic relations and Confidence Building Measures in between the two countries.7 Asia (CICA). In addition, a number of multilateral institutions such as The Strategic Partnership the Turkic Council, the International Organization of Turkic Culture Agreement that was signed (TURKSOY), and the Parliamentary in 2009 paved the way for Assembly of Turkic Speaking Countries strengthening the dynamic (TurkPA) are strengthening the links development of bilateral between Turkey and Kazakhstan relations between Turkey and through carrying out various mutually Kazakhstan. beneficial projects. 9 Another important feature of the bilateral relations is the cooperation in culture and education. In education, Recent Economic Outlook Khodja Akhmet Yassawi International of Turkey-Kazakhstan Turkish-Kazakh University was Bilateral Trade Relations established in 1992, and through exchange programs, thousands of In terms of GDP per capita, Turkey students have been studying in Turkey and Kazakhstan’s income levels are and Kazakhstan since then. Regarding relatively close to each other. In 2015 cultural cooperation, in 2010, the Turkey’s GDP per capita was US$ International Turkic Academy was 9,130 while Kazakhstan’s was US$ established to carry out cultural and 10,508. In both countries, GDP per 9 Nevzat Şimşek, Cengizhan Canaltay, Hayal Ayça Şimşek capita is in a falling trend since 2013. 10,800 to US$ 9,13010. Looking at For instance, Kazakhstan’s GDP per GDP by sector composition in Turkey, capita decreased 8% in 2014 and 20% in 2015 the contribution of agriculture in 2015, falling from US$ 14,310 in was 8.5%, industry was 26.4%, and 2013 to US$ 10,508 in 2015. As for services was 64.9%. For Kazakhstan, Turkey, the drop is relatively moderate compared to Kazakhstan, with the these figures in 2015 were 5% for GDP per capita reduced by 4% in 2014 agriculture, 33.2% for industry and and 11% in 2015, shrinking from US$ 61.7% for services.11 Table 1: Turkey-Kazakhstan Relations Main Indicators (2015) Turkey to Kazakhstan Kazakhstan to Turkey Total Trade 1859 1859 (million US$) Export (million 750 1109 US$) Export Trade Share 0.52 2.78 (%) Investments Foreign Direct Investment 22* 26* (million US$) * January-August 2016 Source: UN Comtrade.com, at https://comtrade.un.org/ (last visited 18 January 2017); TCMB.gov. tr, http://www.tcmb.gov.tr/wps/wcm/connect/TCMB+TR/TCMB+TR/Main+Menu/Istatistikler/Od emeler+Dengesi+ve+Ilgili+Istatistikler/Odemeler+Dengesi+Istatistikleri/Veri+Tablolar (last visited 04 November 2016). Turkey and Kazakhstan have relatively exports to Kazakhstan. In terms of balanced trade relations, with export trade share, Turkey’s exports to Kazakhstan’s exports to Turkey being Kazakhstan constitute 0.52% while only 1.4 times higher than Turkey’s Kazakhstan’s exports to Turkey are 10 Trade Relations Between Turkey and Kazakhstan 2.78% of the total export amount. years of trade, exports have increased When we look at Turkey’s trade by 39 times and imports by 110 times. relations with the other Central Asian Also the gap between exports and countries, we see that Kazakhstan is imports changed in favor of imports Turkey’s second largest export partner by 1.47 times in 2015. This figure after Turkmenistan, and its first import reached its peak in 2008, with a 2.6 partner. Regarding foreign direct times difference between imports and investments, since the beginning of exports13. 2016, Kazakhstan has invested US$26 million in Turkey while Turkish During the period of 1992-2015, investments in Kazakhstan have Turkey’s exports to Kazakhstan grew on reached US$ 22 million.12 average by 26%. Moreover, the period of 2000-2007 was the most stable period for exports, as export volume increased from US$ 116.1 million to US$ 1,079 In terms of export trade million, with an average growth rate share, Turkey’s exports to of 36.3%. However, due to the global Kazakhstan constitute 0.52% financial crisis in 2009, the growth rate fell two years in a row, resulting in a while Kazakhstan’s exports to 42% decrease in exports, to US$ 633.5 Turkey are 2.78% of the total million in 2009. Since then, export export amount. volume has not yet been able to reach its 2007 level, although it came close in 2012 at US$ 1,069.3 million. Exports Turkey’s bilateral trade relations with volume started to recover in 2010 and Kazakhstan started in 1992 with a had risen with an average of 19.2% relatively marginal volume of US$ until 2013.