The Impact of Global Economic Crisis - Essay Example

The Impact of Global Economic Crisis and Responses To it: The Case of Greece & Turkey Greece s 5 March The Impact of Global Economic Crisis and Responses To it: The Case of Greece & Turkey 1.0 Greece Greece is one of the Mediterranean country located in the southern part of Europe and which borders Bulgaria and Albania. The country is also bordered by several seas with the Ionian Sea bordering it to its West, Mediterranean Sea to its South and the Aegean Sea to its East. Greece is described as one the most mountainous countries in Europe. The country has a large mainland known as the Peloponnese which is a peninsula connected to the southern part of the mainland by the Isthmus of Corinth. Following the “Kallikratis” reform of 2011, the country now has seven decentralized administrations which serve as separate regional entities that have elected governors and members of the regional council. Additionally, the country has 13 regions and 325 municipalities. Greece has a small population of approximately eleven million people with these statistics based on the latest census of 2011. The country’s capital city is Athens while the second largest city is Thessaloniki. The country’s official language is Greek while Christianity is the primary religion with a coverage of about 97 percent of the country’s population. There are other additional religions with Catholics, Muslim and Jewish religions taking up the remaining 3 percent. The main church in Greek is the Greek Orthodox Church. Generally, Greece has a hot and dry climate for its summers and cool and quite mild winters that is characteristic of the Mediterranean type of climate. In some parts such as the mountainous regions in the Greece mainland, snowfalls are not uncommon during the winter months. 1.1 Historical background Greece is one of the most popular country in the circles of history today, especially with the greatest mathematicians and philosophers having originated here. The Classical and Hellenistic eras of the country, which were the eras when most of these academicians lived, left behind most of the basis in ideas, art and concepts used in most parts of the world today. The history of Greece is characterized by successions of invasions as well as dominations with various empires such as the Roman Empire, the Macedonian Empire and the Byzantine Empire all ended by the invasion of the Turks. The independent Greek State was incepted in 1830 following the end of the independence war. The modern day Greece saw numerous changes from the 1970s with the adoption of the Presidential Parliamentary Democracy after the country had suffered a 7-year dictatorship under the Constitutional Monarchy system. The country later became part of the European Union in 1981 and in 2001, Greece became part of the Eurozone. 1.2 Culture The Greeks value and adore their culture and history and thus will find it enjoyable sharing and discussing about it with other people and foreigners. However, it is important to avoid the issues of politics and religion as this tend to be sensitive issues to them. Additionally, it would be prudent to avoid any topic regarding their neighboring countries Turkey and Cyprus as the Greeks have strong and virtually rigid views concerning the two countries. It is also important to avoid topics that amount to criticism of the Greek society and people as the Greeks may find them uncomfortable to discuss especially with foreigners. Different gestures have varying meanings in Greece and thus it is important to understand the basic ones to avoid being misinterpreted by the Greek people. Greeks are known for their openness, friendliness and warmth for foreigners which can be attributed to their increased interactions with tourists over the years. This makes the country an easy target for business investors who find it easy to interact and do business with the local people. 1.3 Economic characteristics Greece is considered to be a developed country that highly relies on the service industry at 85 percent of its national economic output. Other major sectors include the industry sector and the agricultural sector. The main source of revenue is tourism with the country ranked as the 7th most popular and visited country in the European Union and the overall 16th position in the world. The transport infrastructure has seen a significant growth with areas of big improvement being the road, rail and air networks. The last few years has seen an improvement in the reliability in the transport industry especially in the country’s major cities. However, Greece was badly affected by the 2008 economic recession that hit most parts of the world. This really affected its currency and consequently led the country into massive debts that put it at a risk of economic downfall. 2.0 Turkey Turkey is a country located at the meeting point of the South Eastern part of Europe as well as South Western Asia. It lies both in the Europe and Asia with the west part of Bosporus being the only part that is considered a part of the Europe continent. Turkey is surrounded by various seas such as the Black Sea, the Mediterranean Sea and the Aegean Sea. The countries bordering Turkey include Bulgaria to its North West region, Georgia to its North Eastern part, Iran, Armenia and Nakhchivan to its East and Syria and Iraq to its South Eastern part. Turkey has a population of approximately 80 million people according to statistics taken in 2012. As earlier mentioned, the country has only a small part of its jurisdiction located in European soil, which only makes up three percent of the total land space of Turkey. This part, referred to as Thrace, however, takes up over 10 percent of the total population of the country. Additionally, the country’s capital city, Istanbul, has a population of over 11 million people. The country is divided into seven major regions; Aegean, Marmara, Black Sea, Mediterranean, Eastern Anatolia, Anatolian plateau and South Eastern Anatolia. These are subdivided further into the 81 provinces of Turkey. Turkish is the country’s official language with over 75 percent of its population communicating in the language. Other languages include Kurdish (18 percent) and the remaining 7 percent comprises of other minorities. Estimates show that Turkey has over 99 percent of its population being Muslims while the remaining less than one percent composed of Christians and Jews. The modern day Turkey/The Republic of Turkey was created immediately after World War 1 in 1923 by Mustafa Kemal, who is has since been honored as the “Father of Turks”. He served as the country’s first president. Earlier historical and archaeological research shows that the Turkish history can be traced back to the “Hittites” who are believed to have settled in Anatolia in the years ranging from 2000 to 1400 BC. 2.1 Cultural characteristics One of the most noticeable cultures in Turkey is seen in its people’s hospitality and politeness to foreigners. However, it is worth noting that Turks will want to first get acquainted with the foreigners to build trust before working or dealing with them. The Turks generally target to create relationships first, and if possible, long-lasting ones with people they are to deal with. However, it is important to understand that Turkish authorities will give priority to the Turkish citizens if job opportunities arise. This leaves most foreign nationals with opportunities such as working in multinational companies, teaching jobs and various multinational press agencies. One will also notice the conspicuous trait of their level of working which can be described as extremely hard and which can last for relatively long hours. For foreigners, this might be a shocker if they are to match this level of working. It is important that any foreigner venturing or visiting Turkey to understand most of the country’s basic culture, etiquette and the people. Being a Muslim country, the religion is a vital part in influencing the people’s everyday lives. Additionally, the Muslim religion helps to shape the values and ideals of the societies in this country. Some of the common guidelines as regards to the interaction with the Turks include; Do not show disrespect to the family unit as it is considered sacred and is highly valued. Learn the differences in body gestures and body languages as what is acceptable in other parts of the world might mean different and appear rude in Turkey. It is always prudent to first create a rapport with the Turks before engaging in any business talks or other serious matters. 2.2 Economic characteristics Turkey is one of the rapidly growing emerging markets with a relatively high growth making the country a newly industrialized country. The country has an open market which makes it a favorite destination for investors. The country’s key trading partners include Germany, UK, Iraq and Russia. Turkey’s main export include machinery parts, vehicle parts and crocheted goods and articles. Turkey has heavily invested in the transport sector due to its influence in the economy and social development in areas such as tourism and foreign trade. The common means of transport include the bus services, trains, boats and airplanes. 2.3 A comparison between Greece and Turkey in the factors affecting the conduct of business As observed in the characteristics outlined above, both Turkey and Greece have various similarities especially in the cultural and economic features. Additionally, both countries seem to be sharing a similar period of elections and economic hardships. Greece has just come out of its election, and has a new Prime Minister. On the other hand, Turkey is warming up for its elections in June 2015. As expected, elections brings many changes and this is exactly what the two countries are anticipating especially in regards to dealing with the economic instability and issues that are facing the countries. Turkey is currently doing better than Greece based on their response to the Global Economic recession that occurred in the past few years. The economic status of Greece is still uncertain especially after the country’s bail out term nears the end. This means that Greece will most probably have to go back to its borrowing ways that initially saw it get into the current debts. However, some analysts say that the country is slowly picking up and gaining investors’ trust which is necessary for its revival process. On the other hand, Turkey’s economic growth rate has been steadily increasing and the country is actually on the right path to recovering from the global recession effects. However, this has not been without challenges along the way. First, the country has experienced a lot of polarization and consequently instability with the ongoing wars and attacks in the neighboring countries such as Syria, largely induced by the ISIS. This has led to a massive social unrest in the country between the two major segments of its populations, the Turks and the Kurds. Additionally, the general elections factor and a relatively high debt rate are other factors that might affect the recovery process of the country from the effects of the global economic crisis. Expectedly, conducting business in Turkey will be easier and preferred at this point in time than it would be in Greece. The two countries might be sharing similar characteristics as well as predicaments although it is common knowledge from the analysis of the two countries that Turkey provides more stability and a better environment for conducting business than Greece. 3.0 Business opportunities, business conditions and challenges of conducting business in both Greece and Turkey As earlier noted, both Greece and Turkey are in elections mood which is typically very influential to the business feasibility of a country. For Greece, the effects of the elections are expected to have a drastic effect on how the investors view the country largely due to the change of leadership that involved swapping of political wings in the country. According to analysts, the new Prime Minister, Alexis Tsipras takes a different direction from his predecessor Antonis Samaras especially in the sensitive issue of seeking a bail-out extension of cancellation which will serve as a source of worry and concern for the financiers and the investors to Greece. However, the ambitious policies regarding ways of dealing with corruption would be a source of motivation for investors in this country On the other hand, Turkey has seen improvements in its economic growth rate which is an important aspect towards attracting investors into the country. However, the claims that the country has been engaging in corruption deals with Iran as well as its unpleasant rank in the corruption index may be the biggest impediments to the country’s recovery process. The major business opportunities being pursued in these two countries are the tourism industry and industrial goods. 4.0 Financial conditions in Greece and Turkey As has been earlier described, both Greece and Turkey have been facing financial constraints emanating from the economic crisis that affected the globe in 2008. Conducting business in these countries is relatively not considered difficult in both countries. In Greece for example, the country faces a difficult spell that is characterized by a lack of external funding which means that the internal funding becomes difficult as well. Most businesses are thus financed using personal funds since the interest rates for loans is still high in these countries. 5.0 Response to the global economic crisis The global economic crisis has widely affected virtually all aspects and players in the business circle such as the governments, businesses and others financial institutions. These players have responded in a variety of ways in attempts to cut on costs and create systems that facilitate financial sustainability. For example, the Greece government has implemented various structural reforms that have helped to raise the labor market flexibility while also improving labor competitiveness. This has been phenomenal in cutting its external imbalances as well as cutting its fiscal instability. 6.0 Current actions being taken by both Greece and Turkey in their road to recovery Following the widespread effects of the economic crisis in both Greece and Turkey, the both countries have embarked on various activities towards driving the economies back to stability. The change of leadership is one of the ways through which new strategies are expected to be introduced in these countries in attempts to make the necessary recoveries. In Greece for example, the election of a new Prime Minister is seen by most analysts as an avenue for infusion of new ideas towards tackling the financial debts that the country currently faces. However, the efforts by the both governments face various challenges with the most notable being the political instability being castigated by the activities of ISIS in Turkey. There has been increased effort by Turkey and other countries towards handling the group which will ultimately benefit the country in attracting investors and other developers. 7.0 Five questions to ask during the trip 1. How will the change of government in Greece (and probably Turkey) help in providing new solutions to the effects of global economic crisis? 2. Is there a need for both countries to seek diversity in their areas of reliance for national economic source of income, for example, Greece overreliance on tourism? 3. How popular Greece’s new Prime Minister among the European Union and other probable financiers especially after his previous scathing attacks on them? 4. Is the ISIS factor affecting Turkey’s recovery process? 5. Have Greece and Turkey done enough so far to recover from the effects of global economic crisis? Read More