Türkiye's Trajectory in Global Competitiveness: Export and Foreign Direct Investments Outlook

The World Competitiveness Index provides critical insights into countries' performance before and after the pandemic, their recovery processes and their competitiveness in the last decade. A review of the main parameters of the index over the last five years reveals that Türkiye's economic performance ranking has improved, although there has been a downward shift in government efficiency. The improvement in Türkiye’s economic performance ranking was attributable to increased diversification among export partners, gross fixed capital formation, tourism revenues and GDP growth. However, despite being related to economic management, the decline in indicators such as the ratio of the budget deficit to GDP, the impact of central bank policies on the economy, and factors reducing tax collection, all examined under the government efficiency parameter, has adversely affected this ranking.

^{Source: International Institute for Management Development. (2024), PwC Analysis}

Evaluating the ranking within the set of competitor countries, it is observed that Kazakhstan and India have moved ahead of Poland, which led in the previous five-year period, to claim the top two positions for the 2020-2024 period. Another eye-catching advancement was made by Hungary, which moved its ranking from seven to four in the second 5-year period. Conversely, Türkiye's ranking among competitor countries has declined by one notch, from 5th to 6th place.

^{Countries are ranked in order by year. The numbers in parentheses indicate the ranking of the countries in the overall list.Yellow indicators indicate a decline in the ranking within the country set, gray indicators indicate that the ranking within the country set is maintained, and orange indicators indicate an increase in the ranking.}

^{The set of countries covered by the World Competitiveness Index changes from year to year. While the index ranked 62 countries on average between 2014-2018, this figure has expanded to include 64 countries on average between 2019-2023.}

^{Source: International Institute for Management Development. (2019), International Institute for Management Development. (2024); PwC Analysis}

Read more

In 2023, Türkiye achieved to increase its share in global trade to over 1%, while export-to-import ratio was maintained at an average of 75% between 2014 and 2023. 

^{* In the ranking of the largest export markets, since the current data for iraq in the product groups detail could not be confirmed, instead of Iraq, the Russian Federation and Romania, which ranked 11th in the relevant years, were added to the list of the top 10 export markets. Top 10 Export Markets between 2014-2018: Germany, UK, Italy, USA, France, Spain, UAE, Iran, Netherlands and Russian Federation. Top 10 Export Markets for 2019-2023: Germany, USA, UK, Italy, France, Spain, Russian Federation, Netherlands, Israel and Romania.
Source: Turkstat, PwC Analysis}

It is observed that the top 10 most exported product groups remained unchanged between 2014-2018 and 2019-2023. This indicates that Türkiye has a strong competitiveness in certain sectors. The fact that high value-added products such as “motor vehicles”, “boilers, machinery and mechanical devices” and “electrical machinery and devices” are among the top ranks in exports demonstrates that Türkiye's technological and industrial capacity in these sectors is at a competitive level in the global market. 

^{* Analysis by product groups is based on the HS2 level of the Harmonized Commodity Description and Code System (HS 2022) product classification. Product groups are ranked according to their share in total exports in 2014-2018.
Source: UN Comtrade Database (2024), PwC Analysis}

Daha fazlası için

Since Türkiye's top 10 export product groups have remained stable over the last decade, the competitiveness of Türkiye and its competitor countries has been compared specifically in terms of these top 10 product groups that Türkiye exports the most. In this context, the global competitiveness and competitiveness in the top 10 export markets of Türkiye and its competitor countries, based on the general export capacity in the top 10 product groups that are important for Türkiye, have been presented for the years 2014-2018 and 2019-2023.

^{* Türkiye's top 10 export markets varied between 2014-2018 and 2019-2023 (Figure 11), so two different sets of countries were used in the competitiveness assessment for the two-year periods. The competitiveness rankings in the top 10 export markets are provided to showcase a comparative view of Türkiye's performance in the leading export markets compared to competitor countries.}

^{Countries are ranked in order by year. Yellow indicators indicate a decline in the ranking within the country set, gray indicators indicate that the ranking within the country set is maintained, and orange indicators indicate an increase in the ranking.
Source: UN Contrade Database (2024), PwC Analysis}

Read more

Countries that are among Türkiye's largest export partners (the United Kingdom, the United States, Spain, Germany) have also stood out as sources of FDI in the last decade. The overlap between the FDI source countries and leading export partners points to the holistic nature of Türkiye's existing global relationships.

^{*Top 10 countries in FDI flows to Türkiye between 2014-2018: Netherlands, Spain, Azerbaijan, United Kingdom, United States, Luxembourg, Russian Federation, Germany, Italy, Belgium. Top 10 countries in FDI flows to Türkiye between 2019-2023: Netherlands, United Kingdom, USA, Germany, Spain, Switzerland, Qatar, Italy, UAE, Luxembourg.}

^{Source: CBRT, PwC Analysis}

While total FDI including the real estate was around USD 70 billion between 2014-2018, this figure declined to USD 54 billion between 2019-2023. Looking at the sectoral breakdown of FDI, the services sector stands out with a 68% share and has increased its share in total FDI by 11 percentage points in the last five years (2019-2023).

^{Source: CBRT, PwC Analysis}

Read more

An analysis of total FDI inflows in 2019-2023 and 2014-2018 shows that India has outpaced its competitors with investments exceeding USD 200 billion. This leadership was driven by a large and rapidly growing domestic market and competitive labor costs. Türkiye, which ranked 4th among 11 competitor countries in the 2014-2018 period, dropped to 6th place in the 2019-2023 period, falling behind Colombia and South Africa in the last five years. 

^{Countries are ranked according to the total value of FDI received in 2014-2018 and 2019-2023. Values in parentheses indicate countries' share of global FDI in the given time period. Yellow indicators indicate a decline in the ranking within the country set, gray indicators indicate that the ranking within the country set is maintained, and pink indicators indicate an increase in the ranking.
Source: UNCTAD Foreign direct investment: Inward and outward flows and stock, annual, PwC Analysis}

A comparative analysis of Türkiye's FDI performance with its competitor countries reveals that Türkiye's competitiveness among competitor countries has declined slightly in the last decade. The average annual FDI received by Türkiye decreased by 20% in nominal terms between 2014-2018 and 2019-2023.While Türkiye ranked 4th among 11 countries in total FDI in the previous period (2014-2018), it dropped to 6th place in 2019-2023. 

Read more