1. CARLOS E. PIÑERÚA COUNTRY SECTOR COORDINATOR, TURKEY THE WORLD BANK MARCH 12, 2012, MADRID “ Turkey: The Role of Small and Medium Enterprises as the Engine of Economic and Employment Growth” 1

2. Outline of The Presentation 2 A Success Story…Is It? Challenges Remain…Where? Lessons…for Whom?

3. A Success Story….. 3 “…a good economic performance and lack of economic problems which are enjoyed by Turkey at a time when many European countries suffer many economic problems and crises display Turkey as a shining star here. I’m greatly proud of this situation.”

4. From High Inflation to Stability 4

5. From Stability to Growth 5

6. Fiscal Consolidation (I) 6

7. Fiscal Consolidation (II) 7

8. Open the Economy 8

9. Willingness to Privatize 9

10. You Get What You Need 10

11. Banking Sector Also Key 11

12. Key Messages: 12 Expansionary Austerity Works. Structural Change Needed for Efficiency and Financing. Banking Sector Restructuring a Must! Sometimes It Pays To Be Lucky Too…

13. Is Stability Sufficient? 13

14. How Competitive is Turkey? 14

15. What are the Challenges? 15

16. Hiring People a Critical One… 16 Redundancy Costs in Selected Countries (weeks of salary, 2009)

17. What is an Investment Climate Assessment? The Investment Climate Assessments (ICAs) use the result of a detailed Enterprise Survey to analyze how different aspects of the investment climate affect the productivity of enterprises. Using a standard survey in countries worldwide, the ICA enables comparisons of investment climate conditions across countries globally The World Bank has conducted ICAs in 110 countries– including in other large, fast growing economies such as Brazil, China; India and Chile. While the responses of individual firms are kept confidential, the aggregate results are shared widely with all interested parties, available on line at https://www.enterprisesurveys.org/portal The analysis of the survey results is complemented by expert assessment in key areas of the investment climate. The overall objective is to provide a road map for policy measures and reforms to improve the investment climate and thus foster economic growth and job creation. 17

18. What Ails Companies (I) 18

19. What Ails Companies (II) 19 Single most severe investment climate obstacles, by firm size Source: Investment Climate Assessment, World Bank

20. SMEs at the Heart of the Economy….. Source: Turkish Statistical Institute Micro:1-9 Small: 10-49 Medium: 50-249 Large: >249 20

21. Turkish SMEs are Growing Slower… Growth Rate of Turkish SMEs Relative to Other Countries % (2004-2007) 21 Source: Turkish Investment Climate Assessment, World Bank

22. Time “Tax” a Critical Issue 22 Proportion of Management Time Spent on Government Bureaucracy

23. What is Turkey Doing? 23 A new Commercial Code.  Transparency  Accountability

24. The Importance of Financial Reporting Accounting and Auditing Development of Capital Markets Job Creation Financial Stability Private Sector Growth Financial Sector Development Improved Access to Credit Financial Information ECONOMIC GROWTH

25. What Should Turkey Be Doing? 25 Regulatory Reform. Labor Reform. Education. Skills.

26. Are There Lessons? 26 Expansionary Austerity? Is Stability Enough? Is It money or Ideas?

27. Government’s Role? 27

28. Thank You Teşekkür Ederim 28