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Entrepreneurship in Turkey

Jonathan Ortmans, President, Public Forum Institute

Turkey offers quite a sophisticated platform for entrepreneurs. It has a diversified industrial base, a relatively stable political and economic environment, a critical mass of willing early adopters, a considerable talent pool, a strong domestic market and underserved neighboring markets. Yet, currently only 6 out of 100 people are entrepreneurs – a very low rate given the country’s level of development. What challenges does Turkey need to address in order to unleash entrepreneurship as a force for economic growth?

Endeavor Turkey has identified many obstacles, including the high costs of navigating the inefficient and inconsistent bureaucracy, the difficulty in protecting intellectual property rights, and monopolistic marketplace dynamics in which dominant players abuse smaller suppliers. It is also difficult to hire and fire in Turkey. According to the World Bank’s Doing Business indicators, Turkey ranks among the most difficult countries in this regard (143 out 183 countries). Then there is the problem of limited access to capital. For Turkey’s youth, entrepreneurship seems like a pipedream given this financial limitation. Accordingly, Endeavor’s entrepreneurship experts recommend that the government launch alternative capital markets, incentivize small business lending and enact regulatory reform labor laws (to allow for part-time, flex-time and long-term consultants).

Perhaps most difficult to change, as is often the case around the world, is culture. Although entrepreneurs “by necessity” are generally respected for their work ethic, entrepreneurs “by choice” who have other promising career options are often discouraged by their families. High-impact entrepreneurs are admired but considered “lucky.” In addition, the absence of a “win-win” social and business culture undermines entrepreneurship and innovation. Thus, Turkey is in as much need for cultural capital as financial capital.

Beyond culture, there also lie challenges with skills and within the education system. Among young Turks, vocational high school students are more inclined to explore entrepreneurship as a career path than the more skilled students, but they lack business skills and the necessary self-esteem due to a “vocational school stigma”. Endeavor has also found that the average person’s ability to identify business opportunities is low. Introducing entrepreneurial thinking and entrepreneurship education early at all levels can go very far in nurturing a culture that rewards prudent risk-taking. Turkey could also incentivize university-private sector collaborations to expose students to the power of entrepreneurship.

Turkey has a lot of work to do to truly tap its entrepreneurial potential and reap the rewards of its investment in R&D (according to the Legatum Prosperity report, Turkish investment in R&D ranks in the top 30 worldwide). The good news is that there is recognition within the government about the urgent need to remove barriers and create incentives. There is a tidal wave of 12 million youth aged 15-24 about to enter the labor market and significant lay-offs during the economic crisis have spurred new interest in entrepreneurial activity.  Perhaps added encouragement by President Obama later this month will connect the dots for Turkey’s government, universities and youth communities in seeing the powerful role entrepreneurialism can play in turning this into an economic opportunity.

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

The author would like to thank Didem Altop, Managing Director of Endeavor Turkey, for providing first-hand insights into Turkey’s entrepreneurial environment.

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