intellectual capital of turkey kamil yılmaz koç university tepek national event bilkent...
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Intellectual Capital of Turkey
Kamil Kamil Yılmaz Yılmaz Koç Koç UUniversitniversityy
TEPEK National Event TEPEK National Event
Bilkent University, AnkaraBilkent University, Ankara
October 9, 20October 9, 200099
Turkey’s Participation in the European Knowledge Economy
Value of Intellectual Capital - 1995
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
USAJP
BGROMTTRLTELIT
PTESHUPLLVSKEU-CZIE
EESI
LUFRCYBENLDEATUKDKFI
SE
HC
SC
RC
Value of Intellectual Capital - 2001
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
USAJPMTTRBGELRO
ITPLPTSKLTHUESCZLVSI
EU-EECY
IEFRDENLLUUKATBEDKSEFI
HC
SC
RC
Value of Intellectual Capital - 2007
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
USAJPTRROBGMTELPTSKIT
PLHUESLTCZEU-LVSIIE
FRCYNLDEEEATBEUKLUDKFI
SE
HC
SC
RC
ASSETS
Human capital Structural capital
Relational capital
HCA-1: youth educational attainment (20-24)HCA_2: population with tertiairy educationHCA_3: occupations and skills in the information economyHCA_4: PISA scoresHCA_6: drop outs
HCA_5: Life expectancy at birth
SCA_1: Broadband penetrationSCA_3: scientific publicationsSCA_4: patent applicationsSCA_5: patents in environment-related technologies
SCA_2: Entrepreneurship - Birth and Death Rates of enterprisesSCA_6: Electricity generated from renewable sources SCA_7: Venture capital investments - early stageSCA_8: Venture Capital
RCA_1: Innovative SME’s co-operating with othersRCA_2: collaboration with public research organizations by innovating firmsRCA_3: international collaboration in scienceRCA_4: foreign collaboration on innovation
INVESTMENT
Human capital
Structural capital
Relational capital
HCI_1: investment in knowledgeHCI_2: expenditure on education per studentHCI_3: expenditure on education as percentage of GDPHCI_4: participation in life-long learningHCI_5:adult training
SCI_1: Gross domestic expenditure on R&DSCI_2: public investment in R&DSCI_3: private investment in R&DSCI_5: SME’s innovating in houseSCI_6: ICT expendituresSCI_7: SME’s using organizational innovationSCI_8: non-technological Innovation
SCI_4: Business investment
RCI_1: government financed business R&DRCI_2: foreign funding of R&DRCI_3: foreign business investments RCI_4: Business-funded R&D in the higher education and government sectorsRCI_5: private investment in education
EFFECTS
Human capital
Structural capital
Relational capital
HCE_2: employment rateHCE_3: employment rate of older workersHCE_4: employment rate of women
HCE_1: GDP per capita in Purchasing Power Standards
SCE_1: Labour productivity
SCE_2: Total greenhouse gas emissionsSCE_3: Energy intensity of the economySCE_4: Total primary energy supply per capita
RCE_1: number of foreign studentsRCE_3: number of international researchersRCE_5: % patents with foreign co-inventors
Value of Intellectual Capital – 2007 Assets
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80
USAJPTRMTROPTBGELESHUSKPLIT
CZEU-27
LVIE
LTATSI
FRDEEENLBELUUKCYDKSEFI
HCA
SCA
RCA
Value of Intellectual Capital – 2007Investments
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
ROELBGPTIT
TRESSKPLIE
HUMTLTCZCYEU-UKSIJPNLLUFRBEDEATLVFI
SEEEDK
USA
HCI
SCI
RCI
Value of Intellectual Capital – 2007Effects
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80
USAJPTRROSKPLBG
ITMTHULVSILTPTELEECYES
EU-27CZFRDENLBEATIEFI
DKUKSELU
HCE
SCA
RCA
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
0
10
20
30
40
50
60
70
80
90
100
TR PT MT ES DK LU DE NL IT RO UK EU-27
LV EE EL FR BE BG HU AT CY FI IE SE LT SK SI PL CZ
%
2001 2007
0
5
10
15
20
25
30
35
40
45
50
TR SI DE AT CZ EL SK PT ES EU-27 USA JP HU SE IE UK IT NL PL DK
%
2001 2005
0
100
200
300
400
500
600
RO BG TR EL IT PT ES USA SK LV LU EU-27
HU FR PL DK UK CZ AT SE DE SI IE BE JP NL FI
Inde
x
2000 2006
64
66
68
70
72
74
76
78
80
82
84
TR HU SK PL CZ SI USA DK PT EU-27
BE FI DE UK EL LU NL AT IE FR IT SE ES JP
Year
2001 2005
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
0
10
20
30
40
50
60
70
80
TR SK UK EE BE PL SI EL PT CZ ES HU IE EU-27
DK SE IT USA FI JP NL FR LU DE AT
1995 2004
0
1
2
3
4
5
6
7
8
EL TR IE ES JP SK CZ IT EE NL DE PT AT EU-27
HU UK PL FI BE FR SI SE DK USA
%
2000 2004 HCI3 Expenditure on educational institutions (2000 - 2004)
0
5
10
15
20
25
30
35
BG RO TR EL HU SK PT PL LT CZ MT IT EE LU LV BE FR IE DE CY EU-27
ES AT SI NL FI DK
%
2001 2007
d) HCI5 Employee Training (2008)
Number of hours(Substitution from IMD Competitiveness Yearbook 2009)
0
1
2
3
4
5
6
7
8
9
EL IT PT BG ES RO TR PL UK SK CZ HU SI FR EU-27
FI LT IE USA EE BE DE LU AT NL SE JP DK
%
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
0
50
100
150
200
250
300
BG RO TR PL LV LT HU SK EE PT MT CZ SI CY EL EU-27
IT ES FR JP DE UK FI BE SE DK AT NL IE USA LU
2001 2007
0
10
20
30
40
50
60
70
80
90
TR MT PL HU IT RO SK EL BG BE LU FR LT ES EU-27
CZ PT SI LV IE DE EE FI JP CY UK AT USA SE NL DK
%
2001 2007
0
10
20
30
40
50
60
70
80
MT TR PL LU HU SI IT BE SK FR AT RO EL BG ES EU-27
CZ NL PT DE LT IE FI CY UK LV DK EE USA JP SE
%
2001 2007
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
0
10
20
30
40
50
60
70
80
TR MT IT EL PL HU RO SK ES LU BE CZ BG EU-27
JP FR IE PT LT CY SI DE AT LV UK EE USA FI NL SE DK
%
2001 2007
Turkish Economy - 16th in the World (Tril. USD, 2008)
Source: IMF, World Economic Outlook
And 6th in Europe..(Tril. USD, 2008)
Source: IMF, World Economic Outlook
Turkey’s demographic window of opportunity..
Will more or less be wiped out by 2050…
Source: Treasury
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…
Government budget deficit declined substantially since 2001..
Thanks to sustained fiscal discipline public sector debt stock declined substationally since 2001 crisis
Conquest of inflation
Long View: Inflation(12-month; %)
0
20
40
60
80
100
120
140
1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Conquest of inflation thanks to fiscal discipline..
-5
0
5
10
15
20
25
30
35
40
01/03 07/03 01/04 07/04 01/05 07/05 01/06 07/06 01/07 07/07 01/08 07/08 01/09
TÜFE ÜFE
Interest rates (%)
R&D Expenditure per capita (USD, PPP)
R&D Human Resources (1000)
Number of Scientific Publications (per million people)
International Patent Applications
But increased difficulty in sustaining high growth rates recently
-6
-4
-2
0
2
4
6
8
10
1990 1995 2000 2005
Share of Agriculture in employment declined dramatically since 2002 …
Unemployment increased to a higher plateau after the 2001 crisis, and yet another one after the global crisis…
5
6
7
8
9
10
11
12
13
14
15
16
unemployment rate 4-q moving average
Turkish growth is driven by domestic demand…
Source: Treasury
Trade deficit continued to rise
0
50
100
150
200
250
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
Bill
ion
US
D
Exports Imports
Current account deficit financed by capital inflows…
-45
-35
-25
-15
-5
5
15
25
35
45
2000 2001 2002 2003 2004 2005 2006 2007 2008
bn
. U
SD
Current Acct.
Capital Acct.
BoP
The rapid increase in CA deficit is also due to rapidly increasing energy
prices since 2002
Since 2001 composition of Capital Inflows changed for the better…
Source: Treasury
Since Dec. 2004 a tremendous increase in FDI inflows
0
5
10
15
20
25
1990 1993 1996 1999 2002 2005 2008
bn
. U
SD
Recent Performance of Sectors (groups based on technology intensity)
(Compounded Annual Average Rate of Change)
b) 2005-2007
-15
-10
-5
0
5
10
15
20
25
30
High upper middle lower middle low
a) 2001-2005
-10
-5
0
5
10
15
20
25
30
35
High upper middle lower middle low
Production Productivity Real Wages Exports
Crisis and Worldwide Recession
3
0.6 0.40.7
-0.7
6
-1.1
-3.4
-2.7
-4.2
-5.4
1.7
3.1
1.3 1.5
0.3
1.7
5.1
-6
-4
-2
0
2
4
6
1 2 3 4 5 6
2008 2009 2010
Post-1990 Crises – Impact on Turkish Trade
1994 (January 1994) 2001 (January 2001) 2008 (September 2008)
Economic Crises and Imports
Toplam ithalat
-1.20
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0 1 2 3 4 5 6 7 8 9 10 11 12
1994 2001 2008
Economic Crises and Exports
Toplam ihracat
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
0 1 2 3 4 5 6 7 8 9 10 11 12
1994 2001 2008
Industrial production declined by an average of 16% in the first eight
months..
-25
-20
-15
-10
-5
0
5
10
15
20
1 2 3 4 5 6 7 8 9 10 11 12
2007 2008 2009
c
Since the beginning of the crisis a dramatic shift in balance of
payments…
-45
-35
-25
-15
-5
5
15
25
35
45
2007 2008 Oct 08 - Jul 09
bn. d
olla
r
Current Acct. Finance Acct.
Errors&Omissions Balance of Payments
The heavy burden of the crisis on Turkish economy
Impact through the trade and finance channels. Collapse of the EU demand led to 35% decline in exports, As the Euro Area economy is expected to shrink around
4% in 2009, the demand for Turkish exports will stay weak, Turkish economy is likely to contract in double digits in the
first quarter, and more than 6% in 2009 Government has recently taken a series of fiscal policy
actions Monetary policy turned into expansionary gear rapidly Would they be sufficient to bring Turkish economy out of
the woods?
After the crisis: Slow recovery for the Turkish economy
The recovery will be slow, thanks to strong headwinds from the trade and finance channels
IIF forecasts sharp decline in private capital flows to EMs in 2009 ($165 bn compared to $920 bn and $465 bn in 2007 and 2008)
Net capital outflows would mean that a strong pick up in domestic demand is unlikely in 2010.
The fiscal deficit is worsening rapidly raising doubts about the sustainability of public sector debt in the long run
Thank You
Indeed Turkey unable to sustain high growth rates since 1940s
Annual growth rate of GDP per capital, 1926-2005(5-year moving averages)
-5
0
5
10
1925 1935 1945 1955 1965 1975 1985 1995 2005
Ann
ual g
row
th r
ate
(%)
Turkey – Demographic Indicators (2008)
Land Area (km²) 774,820 Population (Million) 71.5Rate of Population Growth 1.31%Density (km²) 92.3Urban Population 62.2%Average Age 28.4 Population Aged 15-64 66.4%Labor Force (Million) 24.6Unemployment Rate 10.9%Labor Force Participation 49.1%Female Labor Force Participation 26.2%
0
2
4
6
8
10
12
14
16
18
01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09
Turkey – Major Economic Indicators
2004 2005 2006 2007 2008
GNP (Billion $) 390 481 526 657 742
Real GDP Growth 9.4 8.4 6.9 4.5 2.3
CPI 9.3 7.7 9.7 8.4 10.6
WPI 13.8 2.7 11.6 5.9 8.1
Export (Billion $) 63.2 80.2 85.5 107.2 131.8
Import (Billion $) 97.5 116.8 139.6 170 201.6
Foreign Trade Balance -34.3 -36.6 -54.1 -62.8 -69.8
Tourism Revenues 13.4 15.3 14.1 15.2 22.0
Workers Remittances 0.8 0.85 1.1 1.2 1.2
Current Account Bal./ GDP -3.7 -4.6 -6.1 -5.8 -5.3
Factors adversely effecting Turkey’s Competitiveness
Turkey
Poland
Czech Rep.
Hungary
Share of high technology export (%, 2006) 1.50 3.81 14.10 23.99
Ratio of illiterates (%, + 15 age, 2005) 12.6 1 1 1
Pupil/teacher ratio in primary education (%, 2005) 25.80 11.66 17.53 10.61
Telecommunication investments (ratio to GDP, 2006) 0.22 0.72 0.44 0.37
Number of internet users (per 1000 population, 2007) 241 413 587 443
Electricity cost in industry ($/kwh, 2006) 0.10 0.073 0.094 0.105
Human Development Index (2005) 0.78 0.87 0.89 0.87
Number of computers (per 1000 population, 2007) 83 260 375 306
Life expectancy at birth (2005) 71.5 75.0 76.0 73.0
R&D investments (USD per capita, 2006) 39.7 49.8 215.1 112.1 Source: IMD World Competitiveness Report, 2008
HCA6 Early school leavers (2001, 2007)
Percentage of the population aged 18-24 with at most lower secondary education and not in further education or
training
0
10
20
30
40
50
60
70
SI PL SK FI LT AT HU IE NL BE DK CY DE FR EE EL EU-27
LU LV BG RO IT ES PT MT TR
%
2001 2007
a) SCA1 Broadband penetration rate (2001 - 2007)
Number of broadband access lines per 100 inhabitants
b) SCA3 Scientific articles (1993 - 2003)
Number of articles per million population
c) SCA4 Patent applications to the European Patent Office (EPO) (2001 - 2004)
Number of applications per million inhabitants
0
5
10
15
20
25
30
35
40
TR BG RO EL PL SK CY HU LV CZ LT MT PT SI IE IT ES EU-27
AT EE DE FR UK BE LU SE FI NL DK
num
ber o
f acc
ess
lines
2002 2007
0
200
400
600
800
1000
1200
RO LU TR SK PL HU PT CZ EL ES IT IE JP SI EU-27
FR DE AT BE USA UK NL DK FI SE
num
ber o
f art
icle
s pe
r mill
ion
inha
bita
nt
1993 2003
0
50
100
150
200
250
300
RO BG TR LT SK PL PT EL CZ MT ES SI IE IT EU-27
UK USA FR BE AT JP DK FI LU SE NL DE
num
ber o
f app
licat
ions
per
mill
ion
inha
bita
nts
2001 2004
d) SCA5 Countries' share in environment-related technology patents filed under Patent
Co-operation Treaty (2004)
In percentage
0
5
10
15
20
25
30
EE CY MT LV RO LT SK SI LU PT EL CZ BG TR IE HU PL ES FI BE AT NL EU-27
DK IT SE FR UK USA DE JP
%
a) SCA6 Electricity generated from renewable sources (2001-06)
In percentage gross electricity consumption
b) SCA8 Venture Capital (2004 - 2008)
being easily available for business development maximum number is 7,85)
c) SCI1 Gross domestic expenditure on R&D (GERD) (2001-06)
In percentage of GDP
0
10
20
30
40
50
60
70
80
CY EE PL LU LT UK CZ NL IE BG FR IT EU-27 SI TR RO LV SE AT
%
2001 2006
0
1
2
3
4
5
6
7
8
9
TR HU IT CZ RO PT JP EL SI BG SK PL ES AT FR LT EU-27
DE EE BE LU FI UK IE DK NL SE USA
inde
x
2004 2008
0
1
1
2
2
3
3
4
4
5
CY RO BG SK MT PL EL TR LV LT PT HU EE ES IE EU-27
LU CZ SI NL BE FR DK AT DE USA FI SE
%
2001 2006
d) SCI2 Gross domestic expenditure on R&D financed by government (2001 - 2005)
Percentage of R&D expenditure financed by government
0
10
20
30
40
50
60
70
80
LU JP SE BE FI DK DE USA MT IE UK AT SI FR CZ EU-27
ES EE LV EL HU TR IT RO PT SK PL LT BG CY
2001 2005
a) SCI3 Gross domestic expenditure on R&D financed by industry (2001 - 2005)
Percentage of R&D expenditure financed by industry
b) SCI4 Business investment (2001 - 2007)
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
0
10
20
30
40
50
60
70
80
90
CY LT BG EL PL LV PT SK RO EE HU IT UK TR AT EU-27
ES FR CZ MT SI IE DK BE USA SE FI DE JP LU
%
2001 2005
0
5
10
15
20
25
30
SE LU UK NL HU FI FR PL IT CZ PT AT BE EU-27
DK IE LT TR EL SK BG LV ES EE
%
2001 2007
0
5
10
15
20
25
30
35
40
HU SK PL NL IT ES FR CZ FI PT EU-27 DK SE EL DE AT BE LU TR IE
%
d) SCI6 ICT expenditure (2004)
In percentage of GDP
0
1
1
2
2
3
3
4
4
EL ES IE IT LT PT BG RO SI LV HU SK
EU-2
7 PL AT BE DE EE FR CZ
DK FI TR NL
USA JP U
K SE
%
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 (2001- 2007)
GDP in Purchasing Power Standards (PPS) per person employed relative to EU-27 (EU-27 = 100)
0
10
20
30
40
50
60
70
BG SK RO HU PL LT NL ES MT IT EU-27
CZ FR BE EE EL PT CY AT IE TR DE DK LU
%
0
10
20
30
40
50
60
70
80
BG SK IE LT NL PL ES UK MT RO CZ IT EU-27
HU FR BE DK EE TR CY PT AT LU DE
0
20
40
60
80
100
120
140
160
180
200
BG RO TR LV LT PL EE PT CZ HU SK CY SI MT EU-27
ES EL DE DK IT UK SE NL FI AT FR BE IE USA LU
Inde
x
2001 2007
d) SCE2 Total greenhouse gas emissions (2001 - 2005)
Index of greenhouse gas emissions and targets - In CO2 equivalents (Actual base year = 100)
0
20
40
60
80
100
120
140
160
180
200
LV LT EE BG RO HU SK PL CZ DE UK DK SE EU-27
FI BE FR NL LU SI JP IT USA AT EL IE PT ES MT CY TR
Inde
x
2001 2005
a) SCE3 Energy intensity of the economy (2001 - 2005)
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
0
500
1000
1500
2000
2500
DK JP IE AT DE FR LU IT NL UK SE BE ES EL PT FI CY MT USA SI TR EU-27
HU PL LV CZ SK LT EE RO BG
2001 2005
0
2
4
6
8
10
12
TR PT PL EL HU IT ES SK DK UK IE JP AT DE EU-27
FR CZ NL BE SE FI USA LU
0
5
10
15
20
25
30
RO BG IT ES TR LV MT HU PT SK EL DE PL EU-27
LT UK FR CZ IE NL DK LU SI SE BE AT EE CY FI
%
d) RCI1 Government-financed R&D in business (1995 - 2005)
In percentage of R&D performed in the business sector
0
5
10
15
20
25
30
35
40
JP DK LU NL FI IE HU TR EL PT BE DE SE AT EU-27
UK FR USA ES PL IT CZ SK
%
1995 2005
a) RCI2 Gross domestic expenditure on R&D financed by abroad (2001 - 2005)
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 (1995 -
2005)
As a percentage of R&D performed in these sectors (combined)
0
5
10
15
20
25
30
35
JP TR LU DE CZ PT RO ES PL SK FI SI FR BG SE IT IE EU-27
DK LT HU CY BE MT EE AT LV EL UK
%
2001 2005
0
2
4
6
8
10
12
JP EL IT USA TR AT DE FR PT FI PL ES SE EU-27 UK DK HU IE SK NL CZ BE
%
0
5
10
15
20
25
30
IT JP DK USA PT IE FR AT SE SK CZ EL UK EU-27
ES DE LU FI NL PL BE HU TR
%
1995 2005
d) RCI5 Public-private investment in education (2003 - 2004)
Share of public expenditure on educational institutions (%)
0
1
2
3
4
5
6
7
8
EL TR IE ES JP SK CZ IT NL DE PT AT EU-27
HU UK PL FI BE FR SE DK USA
%
2003 2004
a) RCE1 Foreign students (2000 - 2005)
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
(1993 - 2005)
Patent applications with at least one foreign co-inventor, as a percentage of total patents invented domestically
0
1
2
3
4
5
6
TR PL SK SI EE IT JP ES HU EL LU FI PT CZ NL USA EU-27
IE DE DK FR AT SE BE UK
2000 2005
0
1
1
2
2
3
3
4
TR RO BG CY PL PT LV SK MT LT IT HU EE SI CZ EL EU-27
NL ES IE FR DE JP BE AT DK LU SE FI
%
2001 2005
0
10
20
30
40
50
60
70
80
90
JP IT USA DE FI SE FR NL SI DK ES UK EU-27
AT TR EL IE BE HU PL CZ LU
%
1993 2005