Economy Of Istanbul After Arab Spring

A MAGNIFICENT BEAUTY, AN ENVIABLE CLIMATE AND AN UNRIVALED QUALITY OF LIFE… UNDOUBTEDLY WE’RE REFERRING TO ISTANBUL, APPLE OF TURKEY’S EYE.

We encounter countless articles, magazines, documentaries mentioning Istanbul as a touristic attraction daily. As a matter of fact, the importance of Istanbul lies in the fact that it’s an economic centre that paved the way for its touristic attractions. For centuries, Istanbul, which has been a trade centre and a junction point on the historical Silk Road, is still amongst the world’s largest city economies.

What’s Going on in the World?
Despite continuing problems in the developed economies and despite the recovery time which lasted longer than expected, especially in recent years the world trade started to accelerate positively. After the global financial crisis, which is still continuing, it is approximated that the world economy will achieve rates of growth in the positive direction in regards to both developed and developing countries. As a result of the rapid growth of information and communication technologies, the positive or negative developments have impacts on the far-off regions in the world, thus affecting the economies of these countries. Since 2008, when the global financial crisis started to rise, countries have adapted various exit strategies to avoid the crisis. In cases where appropriations were insufficient, qualified foreign investments that encompass new technology and specialized knowledge were needed.

The years after the crisis have shown us that developing countries including Turkey and Arab countries have reached a record high in regards to foreign investments. According to the World Investment Report prepared by the United Nations Conference on Trade and Development (UNCTAD) in 2018, the total international direct investments in the world amounted to 1,43 trillion dollars in 2017. 49.8% of these investments were made in developed economies, 46.9% of them were made in developing economies and 3% of them were made in transition economies. It’s expected that the investments made will continue to shift from developed countries to developing countries increasingly.

Turkey after the Arab Spring
In recent years, the interaction between our country and Arab countries is increasing rapidly in a positive way. According to IMF data, Arab countries which have a very important role in today’s global economy and the League of Arab States consisting of these countries, aka Arab League has approximately a total GDP of 3 trillion dollars, a population of nearly 400 million and an area of 13,8 million km2. These countries, which are important energy importers of the world, are increasing their market share and are gaining more importance with their budding populations and increasing their influence on other countries. Turkey is considered to be the closest European country to Middle Eastern and Arab countries not only in regards to its geographical position but also in regards to entrepreneurship, productivity, economy, and cultural richness.

Why is Istanbul important for Arab countries?
After evaluating the economic relationship between Turkey and Arab countries, we cannot go on without mentioning Turkey’s most important city Istanbul. Socio-cultural living standards are one of the most important compounds of the term “attraction centre” in regards to international investments. These days, where mentioned standards play an important role, well known cities like Istanbul are becoming prominent. Istanbul, with its dynamic population of 15 million, developing economy, its history dating back 8000 years and its cultural richness thanks to hosting various cultures, earned itself a place among the well-known cities in the world.

Distribution of Foreign Visitors who visited Istanbul by Nationalities

No

COUNTRY Visitors in 2018 Visitors in 2017

Change

%

1 German 1.071.634 986.560 8,6
2 Iranian 934.860 900.810 3,8
3 Saudi Arabian 628.577 557.834 12,7
4 Russian 618.511 494.084 25,2
5 Iraqi 609.589 517.653 17,8
6 English 455.608 380.943 19,6
7 French 448.872 370.517 21,1
8 American 370.112 270.887 36,6
9 Chinese 351.808 221.870 58,6
10 Ukrainian 323.454 304.275 6,3

Source: Istanbul provincial director of culture and tourism, 2018.

We’re closer, thanks to the Turkish Airlines!
As is known, the headquarter of the Turkish Airlines is located in Istanbul. Turkish Airlines, which flies to 121 countries and 301 destinations, holds the record for flying to more countries than any other airline. There are direct flights from Istanbul, which is the third most visited city in Europe to 18 countries and in total 33 destinations, where Arabic is among the official languages. In 2018, 31.4 million foreign tourists have visited Istanbul. Saudi Arabia ranked third with 629 thousand visitors, Iraq ranked 5th with 610 thousand visitors. These two countries in the top ten are followed by Jordan with 282 thousand visitors, Kuwait with 281 thousand visitors and Algeria with 275 thousand visitors. The interest shown in our country by Arab countries is continuing to increase.

Istanbul is larger than approximately 130 countries!
According to Brookings Research Institute’s data, Istanbul is among the world city economies with its GDP of 449 billion dollars and its GDP per capita of 31 thousand dollars. According to these statistics, Istanbul has a larger economy than approximately 130 countries. According to a report published by the same institute right after the global crisis in 2008, Istanbul is the quickest city to recover from the crisis among the cities in the world. Point to take into consideration is, that even the Chinese cities, that are the powerful engine of the world economy, fell behind Istanbul and there were no European or US cities in the top 30. In this regard, the positive investment climate of Istanbul calls the attention of international companies. According to the Industry and Technology Ministry data, there are 65.957 foreign-invested companies in Turkey as of November 2018 and 40.542 of them, which are more than the half, are located in Istanbul. Between 2002-2018 United Arab Emirates have invested 4 billion 219 million dollars, Saudi Arabia invested 1 billion 952 million dollars, Kuwait invested 1,848 million dollars and lastly, Qatar invested 1 billion 797 million dollars.

 International Direct Investments by Countries (Million Dollars)

No COUNTRIES 2018

(January-November)

2002-2018 Total 2002-2018 Rate %
1 Holland 833 24,635 15.9%
2 USA 446 11,773 7.6%
3 Austria 465 10,525 6.8%
4 England 409 10,301 6.7%
5 Germany 349 9,521 6.2%
6 Luxembourg 329 9,438 6.1%
7 Spain 233 9,313 6.0%
8 Belgium 212 8,644 5.6%
9 France 293 7,254 4.7%
10 Greece 8 6,839 4.5%
11 Azerbaijan 516 6,429 4.2%
12 Russia 5 6,214 4.0%
13 United Arab Emirates 14 4,221 2.7%
14 Italy 509 3,604 2.3%
15 Switzerland 147 2,633 1.7%
16 Japan 80 2,597 1.7%
17 Saudi Arabia 12 1,983 1.3%
18 Kuwait 155 1,852 1.2%
19 Qatar 169 1,803 1.2%
20 Lebanon 4 1,291 0.8%

Source: TCMB, November 2018.

Why should Arab Investors choose Istanbul?
There are of course many answers to the question: “Why should international investors should choose Istanbul?” In conclusion, with its economic size, qualified workforce, entrepreneurship ecosystem, innovative industries, and socio-cultural living standards Istanbul is a global centre for investors. Istanbul, the city of opportunities, provides the investors with important job opportunities by focusing on investments fit for its historical, cultural and natural fabric. For Arab countries, Turkey is the closest country to Europe and for Europe, Turkey acts a gate to MENA. As the economic capital of the country, Istanbul is an important attraction centre for Arabic speaking countries.

By: Mehmet Onur Partal
*This article was  published in the  March-April issue of Marmara Life.

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