Twelve factors are considered in The Global Competitiveness Report [GCR] 2009-2010 of the World Economic Forum to determine a country's competitive strength. These are institutions, infrastructure, macroeconomic stability, higher education and training, goods market efficiency, health and primary education, labor market efficiency, financial market sophistication, technological readiness, market size, business sophistication and finally innovation.
As can seen from the given table, the role and weight of these factors change over time at different stages of development. For instance, the first four factors are considered to be the basic requirements in factor-driven economic growth when per capita gross domestic product (GDP) is less than $2,000.
The following six factors are a significant determinant of competitiveness in the efficiency-driven stage of growth when per capita GDP is between $9,000 and $17,000. The last two factors, business sophistication and innovation, are the key factors in the process of innovation-driven growth when per capita GDP is above $17,000.
According to this classification, Turkey is in the process of transition from stage two to stage three. Therefore, the role of the first group of factors will diminish as Turkey makes an effort to improve the effectiveness of the second group.
Basic requirements Key for factor–driven economies Efficiency enhancers Key for efficiency-driven economies Innovation and sophistication factors Key for innovation-driven economies Business sophistication Innovation
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Thanks to these efforts, the situation in Turkey has improved significantly in the post-2001 crisis era. However, comparatively speaking, Turkey still lags behind major competing emerging market economies.
It is stated in the GCR that:
Turkey moved up two places to 61st in 2009, with a stable performance overall.
Turkey continues to benefit from its large market, which is characterized by strong competition (26th) and reasonably sophisticated business practices (52nd).
Compared with other countries, Turkey has also seen an improvement in its macroeconomic stability, moving up from 79th to 64th this year, although this is mainly because of other countries weakening rather than particular improvements in Turkey's fiscal and monetary policies.
On the other hand, some more basic issues must still be tackled, such as upgrading the quality of infrastructure, now ranked 62nd (especially ports and electricity supply), improving the human resources base through better primary education and better healthcare (74th), addressing the inefficiencies in the labor market (120th), and reinforcing the efficiency and transparency of public institutions.
Among the elements that hinder Turkey, addressing the excessive regulation and rigidities in the product and labor market is of vital importance. Although Turkey is the poorest Organization for Economic Cooperation and Development (OECD) country, it has the most costly labor and product market structure. Inter alia, this constitutes one of the greatest threats to the creation of employment, which is currently seen as the biggest social issue in Turkey. In order to have a comprehensive reform in these fields, Turkey must obtain a wider vision and a consensus among major actors in the domestic economy.
