ability to attract foreign investment will be critically important to the country's ability to expand and diversify its export industries.
Improving IPR protection is one way Turkey can attract more foreign investment. A second way is to improve the rules governing foreign investment in so-called concessions. The concessions issue particularly affects foreign investment in energy and telecommunications, two key sectors which underlie the competitiveness of virtually every other sector of the Turkish economy. If Turkey has high-cost, inefficient energy and telecom sectors, how can other industries, which depend on their services ever hope to compete in the global marketplace? The need for new investment in the energy sector is staggering - some $4 billion per year according to the government. But American and other foreign energy companies are ready to commit such funds if a fair, reasonable investment climate is established9.
Good Governance Essential. Investors and lenders are using their financial muscle to demand high standards of corporate governance in what has become a market-based global movement against corruption. The movement is no longer being driven mainly by public policy makers, academics or consultants. In making decision whether to invest in Turkey or any other country, capital providers are now more intently considering such factors as adequacy of disclosure, minority shareholder rights, board structure, as well as corruption, cronyism and bribery.
Support in International Financial and Capital Markets. Turkey has actively sought, and obtained, the U.S. support in its dealings with the IMF and other international lending institutions. The Turkish government has signalled that it will address over the next two years a series of macro-economic stability measures. By implementing this agenda, Turkey hopes to lower inflation to manageable level and to secure continued IMF support. This way, the door is likely to be opened to new inflows of foreign capital. Cheaper access to funds, in turn, will mean more profitable investments for businesses, more employment for Turkey, and bigger tax revenues – with smaller budget deficits. Thus, Turkey will firmly be on track for vigorous growth and broad-based prosperity. The continued support to Turkey from the White House and the Treasury is critical in that process.
Tourism potential from the U.S. appears promising. However, Turkey's share in the American travel market does not do justice to the country's natural and historical appeal. In 1997, 350,000 Americans visited Turkey. This figure was 200,000 in 1990. The U.S. ranked 10th among Turkey's major tourist markets in 1990, it is now in the fifth place. Average annual increase in the number of Americans visiting Turkey has been about 10 % since 1990. This steady increase and trends are promising but plainly nowhere near the potential volume.
Greater Co-operation and Convergence on Regional Issues
For Turkey, the world of the 2000s is a place of far fewer constraints and far greater possibilities than the era of the Cold War. Within the means its resources have allowed, Turkish diplomacy has been quick to exploit new opportunities. Regional co-operation
9 The attraction of Turkey as a place to invest is not limited to the size of its market or the institutional guarantees that minimize risks to investors. Turkey has a modern, efficient banking industry, a fast-developing stock exchange and a business friendly environment where the American investor can operate with peace of mind.