Turkey Reflects US Economy Term Paper

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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.

4. U.S. - Turkey relations

The United States of America and the Republic of Turkey have been engaged in friendly relations ever since the eighteenth century, friendship which was made official with a treaty signed in 1830. In 1947 the Truman Doctrine was signed and this strengthened the U.S. - Turkish collaborations and increased their trust in each other. "As part of the cooperative effort to further Turkish economic and military self-reliance, the United States has loaned and granted Turkey more than $12.5 billion in economic aid and more than $14 billion in military assistance. [...]U.S.-Turkish relations focus on areas such as strategic energy cooperation, trade and investment, security ties, regional stability, the global war on terrorism, and human rights progress."

However the relationship and strategic alliance never ceased, they become tense in the 2000s, when Turkey refused to allow the American troops on their territory and opposed the U.S. interventions in Iraq. "More than any other issue, the situation in Iraq threatens a breach in U.S.-Turkey relations. Turks believe that the Bush administration committed two sins regarding Iraq. First, in the run-up to the war, Washington dismissed Ankara's warnings about the consequences of invading Iraq. Second, as events have confirmed Turkey's grave misgivings about the war, Turks believe the United States has not taken sufficient care to address Turkey's security concerns."

But aside from their opposite view points in regard to the Iraqi war, the two countries continue to collaborate and desire to improve the quality of their international relations. The reasons why, despite their differences, the two countries still collaborate revolve around their common goals and interests. "Mutual interests remain strong across a wide spectrum of issues. On July 5, 2006, Secretary Rice and then-Foreign Minister Gul signed a Shared Vision Statement to highlight the common values and goals between our two countries and to lay out a framework for increased strategic dialogue. The U.S. And Turkey have had a Joint Economic Commission and a Trade and Investment Framework Agreement, which last met in Washington in April 2007, for several years. In 2002, the two countries indicated their joint intent to upgrade bilateral economic relations by launching an Economic Partnership Commission, which last convened in Ankara in February 2007."

Turkey is a highly important ally in the Middle East moreover when the country is willing to collaborate with the Washington authorities and it represents a door to the Muslim community. "Turkey is a Western-oriented, democratizing Muslim country and strategically more important than ever. Turkey has the potential to be an invaluable partner as Washington endeavours to chart an effective course in its relations with the Muslim world."

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… [END OF PREVIEW]

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