Saturday, May 31, 2008

Privatization in Turkey

This week the Pre-MBA World Tour traveled to Istanbul in order to better understand the current business environment in Turkey and to see what types of opportunities might be available to CBS students and alumni during the next decade.

Before arriving, we knew that (as the song goes) Istanbul was once Constantinople. But we didn’t know that Turkey is currently undergoing a significant social, economical and political transition. And somewhere in these winds of change lie several interesting opportunities.

For nearly 25 years, Turkey has been attempting to transfer its state-owned businesses to the private sector. Following a financial crisis in 1994, and another in 2001, the country’s financial system has finally shaken off hyperinflation and has begun to privatize many sectors of its economy.

Furthermore, since 2005 Turkey has been in negotiations to join the European Union. Many of the requirements to join the EU have provided an incentive for Turkish policymakers to change the way business is done.

Among these changes has been a significant movement toward privatization, and this movement (along with a new currency to curb inflation) has made foreign investors more confident. Private equity has begun to flow into the economic system, and GDP has been growing at nearly 8 percent per annum.

Although many people believe that Turkey won’t be admitted into the EU for another five to seven years, the changes that have been made to prepare for this transition have positively impacted the economy.

Whether Turkey should join the EU remains a controversial issue, yet there are clear benefits. One is that Turkey has a young and dynamic population that can contribute immensely to the workforce in Europe (where the average age of the population is increasing every year) and thus can play a role in increasing Europe’s competitiveness with such countries as China and India.

In addition, an interesting political shift has arisen relating to the election of the conservative AK Party. The AKP won the election in August 2008 for the second time, which led to the stabilization of the Turkish economy and an increase in foreign direct investment. The AKP has very strong connections with the United States and has a vision of using aggressive economic growth vision to gain admission into the EU, yet ongoing judicial debates and the party’s nonsecular policies have created uncertainty about its sustainability.

While these controversial topics remain to be tackled on an international level, Turkey is experiencing GDP growth, a stronger currency (fluctuating between 1.18 and 1.39 USD/TRY) and a lower inflation rate, leading to increased urbanization and development at the intersection of Europe and Asia.

The natural beauty and historical richness in this melting pot have increasingly attracted tourism in the past 10 years, and Istanbul remains the center of Turkish history, culture and business. We have found Istanbul to be a wonderful city full of diversity and opportunity.

For more information about the CBS Pre-MBA World Tour, visit

Thursday, May 29, 2008

What to do in Turkey

If your fascinated by Turkey and have always wanted to go, but have some sort of reservation about going, your not alone. I've heard lots of people say that they've heard its not safe to travel alone, or its not safe for women to travel without men in the group, but I don't think those impressions are justified (at least for Istanbul anyway).

I think I speak for our group by saying that we've found Istanbul to be a very friendly city, and possibly one of the most hostpitable in Europe. If your going to Istanbul, here are a few things you should be sure to check out:

- Fortress of Europe
- Turkish Bath (hamam) at Süleymaniye Mosque (a must do!)
- Topkapi Palace, Hagia Sophia, Blue Mosque
- Paddle boat on the Golden Horn
- Basilica Cistern, Hippodrome
- Dolmabahce Palace
- Cruise on the Bosporus
- Grand Bazzar, spice market
- Walk along Istakal street (near Taksim Square)

A few great foods/snacks to try:

- Dondurma (sticky ice cream served with a sword)
- Turkish delight (stick, yet satisfying)
- Turkish tea/coffee
- Fresh fish
- Nargile/Hooka

Prices are quite affordable in Turkey. The currency is the New Turkish Lira and prices are generally about 50% less than they are in western Europe. The bazaars are also a great place to test out your bargaining skills.

One last thing. Go to Reina! It's one of the hottest lounge/club/restaurant in Europe.