Ambassador's Remarks and Public Events

Opening Remarks by US Ambassador Ross Wilson
“Building Value: Creating an Environment for Innovation and Change”
American Business Forum in Turkey

Istanbul,  June 7, 2007

Secretary Sampson, Galip, my many friends here – good morning.  It is an honor to be with you.  Welcome to this conference on innovation and entrepreneurship in Turkey.
Among the many sponsors that are listed in your program and that we should all thank, I want especially to recognize Galip, Sezer Koyun and the American Business Forum in Turkey, as well as TUSIAD, Sabanci University and the university’s National Competitiveness Initiative.

ABFT works effectively here on behalf of US-Turkish relations for collaboration by Turkish and American firms in this country’s economic advance.  I appreciate your leadership.  And Sabanci’s role here is exactly the kind of private sector/university partnership that will help make Turkey more competitive internationally in the 21^st Century.
When I was nominated to serve as American Ambassador to Turkey, I told our senators that one of my key objectives was to update and modernize the relationship between the United States and Turkey.

Our relations have historically been dominated by political and security ties.  Today’s newspapers remind us that cooperation in those areas remains essential.  But relations among 21^st Century allies also require a sturdy third leg of business and commercial interaction. 

Our bilateral trade and investment has improved in recent years.  Trade in goods last year was over $10 billion, and US direct investment in Turkey totaled some $5 billion over the past 12 months.  These figures are way up from a few years ago, but we can do better.  Today's discussions can contribute to that.

Our economic relationship has a long history, predating by decades the establishment of diplomatic ties.  An initial trade agreement dating to the 1840s was superseded by a more formal treaty in 1862 and another in 1929 with the new Republic of Turkey.

In the years after World War II, Marshall Plan and other US assistance – totaling some $54 billion measured in 2004 dollars over five decades – gave Turkey’s economy and our trade relationship a big push.  (We are celebrating this month the 60th anniversary of Secretary Marshall's world-changing initiative.)

A 21st century economic relationship in many ways more resembles a 19th century than a mid-20th century economic relationship.  In today's world of open markets and free flow of capital, the role of government in making or directing investments is far less than 50 or 60 years ago.

Except in countries like North Korea, the private sector sits in the driver’s seat.  The Institute for International Finance estimates that private external financing for emerging market economies totaled $420 billion in 2006.  This dwarfs, by far, the funding provided by governments or international financial institutions.

In 2006, Turkey captured about $32 billion of these flows, on a net basis, to finance domestic investment and consumption.  Some $20 billion came here as foreign direct investment.  This shows the growing confidence long-term investors have in Turkey’s potential. 

But Turkey's share of the global investment pie remains way below its potential.
The responsibility of governments in the 21st century is not to make investments or pick business winners, but to create conditions so that their countries get a reasonable piece of that $420 billion pie.

Macroeconomic and political stability are key, indeed necessary conditions, they are not sufficient.  Investors also look for a dynamic, well-educated workforce, effective protection of private property rights, access to finance on an economic basis, and clear, consistent regulatory and tax policies.  They want an environment where innovators and rational risk-takers can thrive and find rewards unimpeded by unnecessary, unfair or arbitrary government restraints.

Turkey is one of the fastest rising countries in outside observers’ surveys of business climate conditions.  In the Heritage Foundation's Survey of Economic Freedom, Turkey moved from 120^th place in 2003 to 83^rd place by 2007.  That means it leapt ahead of laggard countries doing too little to improve their investment and commercial climates.

But being 83rd out of 157 countries is not where Turkey should be.  Turkey can and should be in the top tier of destinations for foreign investment alongside such recent powerhouses as the Czech Republic, Ireland, Singapore, Israel – and, for that matter, the United States.
Which brings us to today's conference.  This is an opportunity to assess and pull together what are the key policy and other challenges involved in bringing Turkey into that global top tier as a place for innovation, entrepreneurship and doing business.

There are many issues to ponder, but I would highlight the following:
First, what are the policy choices that enabled Singapore and Ireland to vault from poor backwaters to principal destinations for innovation capital, and how can these be applied in Turkey?

Second, what are the educational and other infrastructure investments that supported those policy choices, and what can Turkish educators and planners learn from this?

Third, what are Turkey’s comparative advantages and disadvantages for entrepreneurs and for knowledge-based, high value-added industries, and how can those costs and benefits be changed to win Turkey a larger share of 21^st Century investment?

Why is this interesting to the United States?  One answer is that we care about the health and welfare of our ally, Turkey.  We want to see here economic policies that will ensure our ally and our alliance remain strong in the coming decades.

Another answer flows out of a point made to Secretary Sampson and me yesterday at the Foreign Ministry.  Undersecretary Ertugrul Apakan said that he wants to see the United States participating more in the growth of the Turkish economy.

That is exactly what I want to see, and I was heartened by the support the Turkish government voiced for this conference during our Economic Partnership Commission meetings here and in Ankara in February.

Our traditional trade and investment relationships are fine and should be nourished, of course.  But to really grow, one of the areas we should focus on is the 21^st Century economy that relies more on knowledge, creativity, sophistication and quality than on quantity and mass production.  Frankly, both of our countries will be losing those markets to places like India and China.

So I want to see American firms invest in and find collaborative opportunities with Turkey that will be advantageous for both our countries.  The issues this conference will address can help us as policy makers focus on the right issues and arguments to get there, and it can draw attention to the potentials here today and for tomorrow.

Companies such as Ford Otosan have won multiple awards for the efficient, high-tech productivity.  The success of companies like Vestel, Airties, or Tuzla's high-end yacht building industry also shows that cutting-edge innovation and dynamic growth are for real here in Turkey. 

Our hope is that this kind of success becomes the norm.  Turkey's educational system produces many of the world's most sophisticated scientists and engineers.  I have had the privilege of meeting many of them -- in the United States.  I like having them there -- they make the US economy stronger -- but why aren’t they here?

The conditions necessary for attracting promising, internationally-trained Turkish engineers in Turkey are they same condition for attracting talent from anywhere to this country – and for attracting entrepreneurial investors and innovators. 

As you launch today's discussion, I urge you to do so in the spirit of our topic – in an atmosphere of innovation, creativity, and problem solving.  No holes barred. 

I believe that the United States and Turkey have a very bright future together as prosperous, democratic allies.  We can and should learn from each other, and I hope that is what we will do today.

Thank you very much.