Türkiye’s relatively lower credit ratings from international credit rating agencies might intuitively lead to the notion that it is a difficult place for investment. Furthermore, unfair restrictions on certain products, such as drone engines or not delivering fighter jets, cast many uncertainties on the investment attractiveness of Türkiye. However, recently, many major companies and investors (most notably Tesla and Elon Musk, as well as Ali Baba and Jack Ma repeatedly expressing interest in investing $2 billion in a logistics base in Türkiye) have expressed great interest in making strategic investments in Türkiye. Gulf States such as the United Arab Emirates (UAE), Qatar and Saudi Arabia have pledged billions of dollars worth of investments in Türkiye.
In September, President Recep Tayyip Erdoğan’s visit to New York City and several ministers provided a valuable opportunity to engage in discussions with potential foreign direct investors, generating significant interest from prospective investors. Despite certain macroeconomic challenges, including high inflation rates, Türkiye evidently maintains its ability to attract substantial and strategic investments.
Türkiye’s ability to still be able to attract investments rests predominantly on its inherent strengths and advantages, such as its geographic location as well as its industrial capability and human capital. Türkiye’s strategic location with access to the Balkans, the Middle East, the Caucasus, the Black Sea, Central Asia, Africa and Europe is amplifying its value in terms of both geopolitics and geo-economics. Türkiye has a crucial location advantage as a center of trade, logistics, supply chain and energy transition center, in addition to the infrastructure and experiences in the services sector. Türkiye, being a NATO member as well as having a customs union with the European Union, has institutional advantages as well.
Hence, Türkiye is still a center of energy and trade routes, making it attractive to major investors. Moreover, there is international recognition that the Turkish defense industry and technologies have developed significantly. This would also be an area where cooperation could advance the prospect of further investments. After all, with ongoing crises such as the climate crises and refugee crises, forest wildfires, floods, earthquakes and other natural disasters, there is an increasing need for engaging military capabilities for civilian search, rescue and later support missions. Such new requirements necessitate new and better technologies that were associated with armed forces but increasingly are more necessary to be used to help disaster recovery missions around the world.
Türkiye’s sizable population and geography, in addition to having relatively young and skilled people, make it both an attractive market as well as a production and supply base.
However, Türkiye still has much to do in terms of ensuring a rules-based economic system as well as making further infrastructure investments and storage capacity and technology up-vamping to remain a center of attraction for investors, both foreign and domestic. Investor confidence would further help Türkiye develop its full potential as a trade logistics and energy center on a global scale. Furthering institutional consistencies, the rule of law, transparency, anti-corruption, as well as clear rules that make the market and country foreseeable in the near and distant future would be key assets for being able to attract even more major investments needed for infrastructure, energy, as well as transportation and storage.
To some extent, the relatively low rating can be seen as reflective of the occasionally biased European stance toward Türkiye. While many Western credit rating agencies frequently criticize Türkiye for insufficient reforms, they often overlook the unjust treatment Türkiye has endured during its EU membership process. Türkiye maintains a customs union with the EU, adheres to numerous EU economic regulatory standards, and is among the few non-EU nations committed to adopting EU environmental policies, including emissions reduction and a transition to a circular economy. In addition to aligning with the EU’s Green Deal and border carbon trading scheme, Türkiye also launched the global “Zero Waste” campaign as an environmentally friendly initiative.
To achieve environmentally neutral infrastructure and transitions at all economic levels, both in Europe and in Türkiye, new investments are essential. It’s worth noting that European countries are Türkiye’s primary trading partners and major sources of foreign direct investment.
Türkiye’s degree of integration with the EU and its solidarity with fellow NATO member countries have few parallels. The EU wields significant political, economic and sociological influence in shaping European politics, yet its collective security and defense capabilities are somewhat limited. In this context, NATO membership stands unparalleled, as it is widely recognized as a robust security alliance that serves as a protective shield for its member nations against potential threats. This factor plays a pivotal role in investment decisions related to Türkiye, as being a NATO member provides Türkiye with the assurance of being part of the world’s most crucial collective security organization and the cornerstone of the Western politico-military alliance system.
From both political and military standpoints, this advantage is invaluable for investors. The recent applications of Sweden and Finland for NATO membership underscore the continued significance of this organization in providing security, even for EU member states. Therefore, Türkiye’s NATO membership serves as a source of confidence and reassurance for investors.
Even though Türkiye is not part of the EU and there is an uncertain prospect regarding eventual membership, Türkiye’s trade volume and a significant number of citizens living in Europe demonstrate that Türkiye is integrated with European politics. This makes Türkiye more closely scrutinized because it is more integrated with European politics than any other country in Asia or the Middle East. Although in recent years Türkiye has had policies such as “Asia Anew” and opening toward the Middle East, much of its trade as well as cooperation in terms of science and industry as well as tourism and in many other areas are interrelated with EU countries. Therefore, Türkiye and the EU will likely continue enhanced cooperation over the following decades despite periodic ups and downs.
Türkiye shares more democratic values, the rule of law and norms in line with rules-based societies, in common with European states than the politicians would like to admit. Criticizing Türkiye is unfortunately common in domestic politics of many European countries, even though after the elections, the same leaders, once they form government, tend to coordinate closely with Türkiye on key issues such as the migration crises.
In conclusion, Türkiye has opportunities in a new post-COVID-19 world of political and economic order to be at the heart of the trade between the West, particularly Western Europe, and the eastern states of Eurasia. Türkiye’s strategic location, coupled with its favorable demographics and robust infrastructure, positions it as an appealing market and a prime hub for regional operations in East-West trade. Due to an increasingly evolving Indo-Pacific region as the potential new center of the global economy rather than the Euro-Atlantic region, Türkiye’s location is of critical importance. For this reason, Türkiye is actively promoting new Silk Road projects like the Middle Corridor and the Arab Peace Road through Iraq while also maintaining its involvement in China’s Belt and Road Initiative (BRI). Türkiye should also continue its efforts to be integrated into the proposed India-Middle East-Europe Economic Corridor (IMEC) project.
Given Türkiye’s pivotal role in global trade, supply chains and energy transition, it is highly advantageous for these projects and corridors to include Türkiye, facilitating trade, logistics, industry and the implementation of modern facilities, such as storage and digitalization, which would ease international trade. We have seen in the past, with the problems that occurred in the Suez Canal, how vital and crucial role Türkiye could play in easing international supply chains. Therefore, Türkiye can still attract significant investment because of its position as a center of international trade, logistics and supply chain.