Deputy Secretary's Speech

Deputy Secretary of Commerce David A. Sampson
American Business Forum in Turkey
Istanbul, Turkey

Thank you, Galip Sukaya, for that introduction and for inviting me to speak to you today.

It’s a pleasure to be here in Turkey, a country that is not only an ally of the United States, but a friend and partner for more than 80 years. That partnership extends beyond our extensive diplomatic and military ties, and is deepened by personal bonds and a meaningful economic relationship. These bonds are formed by the hundreds of thousands of Turks who have studied in the U.S., and by the more than 100,000 Turkish-Americans who have added so much to our society. And the subject of today’s conference on innovation and entrepreneurship presents an opportunity to strengthen our economic ties. So, I appreciate this opportunity to be among friends to discuss a subject that is critical to both of our economies.

Among the key factors in America’s continued economic success is that we have unlocked the power of our private sector and established clear paths for them to get their ideas to the marketplace. Indeed, 75 percent of the value of publicly traded U.S. companies is intangible assets, namely ideas and innovation. This kind of economic performance is not limited to the U.S. It can flourish wherever free markets and the private sector are empowered. I encourage you to work with the Turkish government and your private sector colleagues to continue to improve the business climate in Turkey. This will strengthen our bi-lateral relationship and help create an environment that supports entrepreneurs, attracts investors and spurs innovation.

The good news is that recent events indicate Turkey is building a modern, knowledge based economy. Progressive government policies that protect ideas and encourage entrepreneurship accelerate growth—growth that has the potential to create opportunity for all Turks and improve their standard of living.

Those who have taken advantage of the economic reforms of the last few years have been well rewarded for that confidence. GDP has increased at a rate more than twice as fast as the EU, while inflation has become manageable and moderate. Foreign investment in Turkey’s economy continues to surge, increasing 73 percent to nearly $20 billion last year.

Accompanying all of this domestic good news has been growth in trade. Last year Turkey’s trade volume reached $223 billion. And U.S.-Turkey bilateral trade increased 17 percent to $11.1 billion last year. Turkey was a larger market for American exports than Russia. (U.S. exports to Russia grew 20 percent to $4.7 billion in 2006.) And for the first quarter of this year U.S. exports to Turkey are up nearly 23 percent over last year.

To maintain Turkey’s progress, I would encourage government leaders to focus on policies that improve effectiveness, efficiency and transparency. We need to continue to focus on doing all we can to ensure that entrepreneurship and innovation are rewarded.

Education systems must prepare a new generation of workers to fill the jobs of the 21st century. To ensure that workers can gain the skills needed for the best jobs, governments need to modernize and strengthen education and training.

If a country is to foster an innovation-based economy, a strong intellectual property rights regime is required. There must be an established law to protect intellectual property, enforcement of those laws and consequences for violations.

Unfortunately, at time when innovation is more critical to a country’s economic strength than ever before, intellectual property theft is still a global concern. For U.S. businesses alone, IPR theft costs $250 billion every year in lost sales and hundreds of thousands of lost jobs.

The Turkish Government is recognizing the importance of this problem. During the last year, there has been increased cooperation between the police and industry groups to identify and seize pirated products. In addition, judges are being trained in intellectual property rights issues and imposing stronger penalties against violators.

But, more needs to be done, and we are ready to work with the Turkish Government to improve Turkey’s enforcement of IPR.

For entrepreneurs to flourish, they must not be impeded by bureaucracy. Although recent reforms in Turkey have simplified procedures for establishing a business, the taxation system has been made more business friendly, and the judicial system has taken steps to speed up the processing of commercial cases, more can be done.

In this year’s World Bank Ease of Doing Business report Turkey ranks 91^st out of 175 countries measured, having been surpassed by seven countries since last year. Turkey’s low ranking is caused in part by uncompetitive policies with respect to licenses and employment. In the area of labor flexibility, Turkey ranks 146, with the cost of letting an employee go, equaling nearly two years of full-time pay.

These impediments (1) discourage investment, particularly green field investments, (2) suppress incentives for Turkish entrepreneurs, and (3) ultimately restrict opportunities for all Turks.

Turkey has an impressive legacy of entrepreneurs like Kenan Sahin who founded a company that evolved into Lucent Technologies Software Group and Ahmet Ertegün of Atlantic Records. Turkey is taking steps to develop an environment where these ideas can flourish here as well as overseas.

Turkey has come a long way in a short amount of time. Real, concrete economic reforms have created one of the world’s fastest growing economies. Turkey possesses all of the attributes necessary for success. It is now critical to continue the development and implementation of policies that will unlock this country’s true potential.

Just as in the United States, Turkey should ensure that the business climate is free from the obstacles that limit innovation and stifle entrepreneurship. If Turkey is able to confront these challenges it will become an even more attractive destination for investors and businesses, creating hope, growth and opportunity for all Turks.

Consider the possibilities: while Turkey attracted $17 billion in FDI last year, tiny Singapore received more than $48 billion. And while our trade with Turkey is larger than many countries in the region, it was less than a third of our trade with Belgium, a country with about the same GDP as Turkey, but with only 15 percent of the population of Turkey. So, there is a great deal of untapped potential in your economy, and in our economic relationship.

As Ataturk said, "National sovereignty should be supported by financial independence. The only power that will propel us to this goal is the economy. No matter how mighty they are, political and military victories cannot endure unless they are crowned by economic triumphs."

I’m optimistic about opportunities in Turkey, because I believe that the Turkish people are optimistic about their future and want their country to be successful. Your presence here today means that you are dedicated to these ideas, and committed to not just participating in, but being catalysts for, Turkey’s transformation. As you seek to achieve your goals of a dynamic, entrepreneurial and innovative economy, the United States remains your partner in economic growth and success.