Turkey and the United States economic relationship and development

Turkey Reflects Us Economy

Turkey and the U.S. Economy

Economy is the undisputed force that both unites and separates global entities. Countries are economically united in the meaning that they share similar goals, such as reducing the national debt, or the governmental deficit, improving the population's living standards by increasing their wages and pensions, keeping prices under control or strengthening the national currency.

States are economically different as they possess dissimilar resources on which to base their economy. For instance, some countries possess significant crude oil natural resources and the revenues coming from this industry gather up to 60-80% in the national gross domestic product. Other countries possess rich and fertile soils that make the agricultural industry vital to the national economy. David Ricardo's theory of comparative advantages encourages countries to internally produce those goods for which they possess a comparative advantage and then exchange them on the international market in return for products they cannot produce internally (or encounter difficulties in producing).

The theory is becoming more and more common in practice, especially today with globalization and market liberalization, when countries develop strategic alliances and produce complementary goods. States that used to have nothing in common are today working together to the benefit of both parties and have become interdependent. However this was not expected, generally due to their geographical positioning and major cultural differences, the United States of America have developed a strong relationship with Turkey; a relationship that is revealed by both country's economical features.

2. U.S. economy

The United States of America have one of the strongest economies on the globe and in 2006 they registered the highest gross domestic product, of $13.21 trillion. The economy is praised for their market flexibility, skilled labor force, increased productivity, technological developments, large financial resources for investment and low unemployment rate. A major threat is being posed by the extremely large national deficit.

The American economy is generally based on the following industries: petroleum, steel, automobiles, airspace, communications and telecommunications, electronics, chemical and food processing. For 2006, the total value of the exported products was of $1.024 trillion and the imports totaled $1.869 trillion. The main export partners include Canada, Mexico, Japan, China and Great Britain and these countries generally buy agricultural goods, chemical products and compounds, automobiles and high technology gadgets. The main import partners are Canada, China, Mexico, Japan and Germany, which sell crude oil, hi-tech machineries, motor vehicles and other general merchandise.

3. Turkish economy

Turkey is a continuously growing and developing economy which encompasses both traditional as well as modern features and industries. For 2007, the estimated gross domestic product has a value of $708.053 billion, registering as such a 6.1% increase as compared to fiscal year 2006. In 2005, the economy grew at a rate of 7.4% and in 2004 it grew at an 8.9% rate. The economic development is generally due to increased interest from foreign investors and the future possibility of Turkey's adherence to the European Union. Problems are posed by the still increased national debt.

The main industries are "textiles, food processing, autos, electronics, mining (coal, chromite, copper and boron), steel, petroleum, construction, lumber, paper." The country basically exports apparel, food, textiles, metals and equipments to Germany, Great Britain, Italy, United States, France and Spain. The total value of the imports for 2006 was of $91.89 billion. Turkey imports machineries, chemicals, semi-finished goods, combustibles and equipments from Russia, Germany, China, Italy, France, United States and Iran. In 2006, the imports are estimated to have reached a total of $132.1 billion.

5. Turkey - U.S. Trade

The Turkish market is far from being completely liberalized as it is currently under the European Union's regulations. The next step to be taken in the relations between Turkey and United States in regard to trade is the expansion of both imports and exports as to create more jobs, improve the living standards and boost the economy. Also, the two countries will "work together for successful conclusion of the WTO [World Trade Organization] negotiations. We are prepared to work with Turkey and other partners, on the basis of reciprocity, to open new opportunities for Turkish exporters of agricultural products, manufactured goods, and services. We also have a shared interest in ensuring that Turkey's neighbours become WTO members and that Middle East countries move rapidly toward freer trade. Turkey will also benefit from the competitive pressures that multilateral liberalization will bring."

In all, the future intent is that of increasing the amount of traded merchandise from both countries. "The U.S. goods trade balance with Turkey went from a trade deficit of $913 million in 2005 to a trade surplus of $366 million in 2006. U.S. goods exports in 2006 were $5.7 billion, up 34.2% from the previous year. Corresponding U.S. imports from Turkey were $5.4 billion, up 3.5%. Turkey is currently the 30th largest export market for U.S. goods."

7. Other implications

However the imports from and exports to Turkey do possess a significant portion on the U.S. economy, they were not the main reason why strategic alliances and economic collaborations and partnerships have been developed. The main reason, however rarely outspoken, resides in the United States' need of Turkish assistance. To better explain, the U.S. needed to enter the Middle East markets and Turkey was the open door to the region. "Turkey has been an integral part of a thriving Mediterranean economy, a crucial land bridge between Europe and Asia, a trade crossroads, an essential warm water maritime link for Ukraine and Russia, and the centre of the Byzantine and Ottoman empires." Once U.S. successfully enters this region, it opens up the door to the surrounding and otherwise difficult to enter markets. This generates new possibilities of imports and exports and easier access to the natural resources of the Middle East. Aside from new partnerships and strategic alliances, all these bring about new opportunities for economic growth and development in the United States of America.

Being that Turkey is a modernizing and democratizing country in need of support to economically grow, they offered their aid to the U.S. In exchange for economic support. Also, the Eurasian country possesses military skills and equipments, much desired by the U.S. officials. "The United States provided economic aid and unique textile market access because of Turkey's cooperation in the military arena."

The future impacts Turkey might have on the U.S. economy are yet to be established. However, there are two possible alternatives, a beneficial one and a less beneficial one. Both alternatives are based on the nature of the partnership between the two countries and refer to the fact that the United States offer economic support in exchange for military services. But the Middle Eastern country is developing and is becoming stronger and more independent with each year.

The first alternative implies that a strong and developed Turkey realizes it no longer needs aid from the United States and based on cultural differences and other divergences, renounces the strategic alliances. This would have the major disadvantage of closing U.S.' door to the Middle East and loosing a trade partner. Consequently, if would negatively impact the American economy.

The second alternative, still keeping in mind Turkey's development, is that the country will continue, further develop and improve the international relations with the United States. Realizing the great importance the American state has had upon their economic growth and development, Turkey could sustain the Washington officials in their intent to penetrate the Middle East markets. This would undoubtedly lead to more partnerships, strategic alliances and trade partners, generating significant opportunities for the growth of the American economy.

The probability of occurrence of the first alternative is quite reduced in comparison to the second. However it is possible due to Turkey's alliance with the countries in the Middle East, the cultural dissimilarities that differentiate Turks from Americans or the numerous points of divergence, such as Iraq, Iran, Cyprus, Syria and Israel. The second alternative is the one that better stands to occur and this belief is based on Turkey's commitment to modernization and democratization.

8. Conclusions

Turkey is a Eurasian country characterized by a mixture of traditions and modernism, with both eastern and western influences. To Turkey, U.S. represents an important strategic ally which invests in the country's development, creates more jobs and improves the population's living standards. To the United States, Turkey represents an international partner which supports the country in two meanings. First, they offer military services and assistance, and secondly, they represent a pathway to the countries and markets in the Middle East. In return for these benefits, America sustains Turkey's economic development.

The cultural differences and the opposite stand points in regard to international issues, such as the war in Iraq, have created tensions in the relations between the two countries, but the partnerships have never ceased or been interrupted. Turkey and the United States of America have reached a strategic level where they became interdependent states, which aid and support each other. If the U.S. economy is flourishing, Turkey gets increased investments and can sustain a growing economy. If the Turkish economy grows, the U.S. gets a strong international partner, which can develop better products, including military, and support the American economic growth through imports and exports.

In a nutshell, both countries have implications upon each other's economy and the general tendency is that of evolving in the same direction. In addition, as pointed out by Jaroslaw Pietras, the former EU negotiator of Poland, a third country can be interposed in this relationship - Germany. "The stability of the Turkish economy is dependent on German and U.S. markets. If the U.S. economy goes well, if the German economy goes well that means the Turkish economy will go well."