The Impact of the Global Economic Crisis in Greece and Turkey - Essay Example

Chenxue Zhang BUAD 843 Kane March 27th, The Impact of Global Economic Crisis and Response to it: Greece and Turkey Case Take Home Exam Introduction There has been a concern in the countries of Europe after being faced by crisis for the last two decades. Specifically, Turkey has been faced with numerous economic crises between the years of 1990 to 2001. Turkey established a transition of the program of a healthy economy and moved to a session of macroeconomic stability, which has enabled the stability of her monetary back to the stable state (Parlar, 2014). For the Greece, it has some ongoing debt crisis, which was triggered by struggles of the Great Recession. The Greeks economy has over years experiencing great structural deficits and debt to GDP levels. In late 2009, the fears of the economic falling started among the investors. In April 2010, the news broke out of the adverse deficit and debt data. A year later Greece began to build and regain economic stability, which it had before the crisis. The building has been a challenge, but many steps have been made towards the same. Greece and Turkey Economic Crisis and Response Greece has been a weaker nation in terms of economy. The nation has been in politico-financial struggles after the collapse and failure of Athens Stock Exchange. The government officers fueled the crisis by often uttering statements, which led to wild market. The fall of the Stock Exchange resulted in great losses to many investors in the nation especially the small investors and the biggest redistribution of the wealth occurred in the country (Schiek, 2014). This loss was the greatest ever to have happened. The prime minister was the one who was responsible for the dramatic rise and fall of the Stock Exchange. Four countries and three seas surround Greece. These countries include; Bulgaria, Albania, Turkey and Republic of Macedonia seas include Ionian, Mediterranean and Aegean Sea (Chaulia, 2014). Greece experiences three types of climates, which includes Mediterranean climate, alpine climate, and temperate climate. Over eighty percent of Greece is covered by mountains. Most of the mainland to the south forms the Balkan Peninsula. The major ranges of Greece include the Pindus and Dinaric Alps. The highest mountain is the Mount Olympus. Greece has a very large island called Crete. Greece has numerous hazards to its environment, which include droughts, wildfires and earthquakes. Greece politics takes place in the parliamentary representation where prime minister is the states head. Greece has a multiparty system of government. Hellenic parliament and the government have the legislative power (Jandieri, 2014). President is elected by the parliament for a term of five years. When the term of the sitting president expires, the parliament is supposed to vote for a new president. The president of the nation is bestowed with the power to declare war, terminate agreements of peace or grant pardon. Citizens upon declaration of confidence in the parliament and the office of the prime minister elect the prime minister. Greece has a culture, which has evolved over many years. It started with the Mycenaean Greece to the most recent Classical Greece via influence of Romanian Empire to its successor Byzantine Empire. There are other cultures, which include Venetian, Genoese, Ottoman, British, Persian, Latin and Frankish. In old days was a birthplace of the western culture and the democracy (Ciro, 2013). The current democracies owe a significant debt to the Greek beliefs of peoples government of people-by-people. Traditionally, Greeks introduced many fields, which relied on the systematic thoughts, which included geometry, biology, history, physics and philosophy. The Greeks introduced some literary forms like lyric and epic, history, tragedy, comedy and poetry. In the efforts of proportion and order, Greeks created a strong beauty, which influenced western culture (Eichengreen, 2012). The main aspects of culture in Greece today include traditions, language, religion, music and food. Business has not been doing badly, but there are a number of challenges posed by a number of factors. For instance, the terrain of the nation is quite hilly and mountainous; this affects the transportation of goods from place to place. Again, Greece is a small nation; there is a challenge of expanding the businesses also population is quite small for one to establish a multi-dollar business. The culture has a great impact on the businesses established in Greece in the sense that the peoples way of living will influences the type of goods, which they use. Thus, one start a business should be the one where the culture of the Greeks allows them to use. The political nature of the Greece is also very important factor to consider while establishing a business (STOREY, 2012). The government policies imposed by the government will affect the business, which are established by various companies. Turkey has of late experienced global and financial crisis. The most recent crisis occurred from 2008 to 2009; it affected the nation in many ways (Marois, 2012). Abrupt interruption of flow of capitals was experienced, which affected almost everything in the nation. Thus hindering its growth economic wise and in other aspects. The macroeconomic instability has been the major Turkey’s blow to its economy. The aspect of being irresponsible with the finances, poor monetary policies, poor financial regulation and unsuitable fiscal expenditures is there to blame for the global crisis, which took place. The country came out of 2001 crisis and started fixing traditional sources fragility. The crisis demonstrated that an economy, which is financially open, has many loopholes. The Turkeys economy grew very fast before the most recent crisis, which took place. After the crisis, the economy regained its shape, and the stable condition has already been attained. Turkey has a long history, which dates back to 1990 B.C. The Persian Empire had occupied the land in 6th century B.C. they paved way for the Roman Empire. The Ottoman Empire came to occupy the nation after moving from the Persian Gulf of Algeria. After the helm of Sultan SuleymanI, the Ottoman Empire began to decline slowly. The Turkish shortcomings lead to rise of revolt of Young Turks who installed a liberal government (Vaughan-Whitehead, 2012). Turkey is bordered to the northeast by Mediterranean Sea, to the southwest there is Asia and to the southeast is Europe. The northern side there is a black sea; the west there is the Aegean Sea. It neighbors Bulgaria and Greece to the Azerbaijan, Iran to the eastern side. Syria and Iraq are to the south. Turkey has an area small equivalent to the area of Massachusetts State. The Turkeys culture has heterogeneous and diverse set of elements derived from the different cultures of West Asian. Many of the traditions were brought together during the time of Ottoman Empire. The present day Turkey was declared in 1923 after the dispersing of Ottoman Empire, which was multireligious and multiethnic. At her early years of the republic, the government invested heavily on sculpture, paintings and architecture (Ardigó, 2015). In addition, Turkish is the countrys 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. Mustafa Kemal, who has since been honored as the “Father of Turks,” created the modern day Turkey alias The Republic of Turkey immediately after World War I in 1923. 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. In addition, Turkey is seen in its peoples hospitality and politeness to foreigners. However, it is worth noting that Turks will want to first be acquainted with the foreigners to build trust before working or dealing with them. The Turks 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 that 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 countrys basic culture, etiquette, and the people. Being a Muslim country, the religion is a vital part in influencing the peoples 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; 1. Do not show disrespect to the family unit as it is considered sacred and is highly valued. 2. 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. 3. It is always prudent to first create a rapport with the Turks before engaging in any business talks or other serious matters. The factors of cultural, geographical and historical of both Greece and Turkey differ. For instance, the cultural factors of the two nations differ in that countries have different cultural background. For the case of geographical aspect, Greece is more mountainous but Turkey is less hilly. The history of the two nations is different. For the countries, they have different business dynamics, which influence the business starting in the area. For instance in Turkey, it is advisable for one before setting a business to the peoples culture that is the Turkish culture. One should also understand the Turkish etiquette get to know how business potentials are essentially done (Ibrahim Sirkeci, 2012). There is also the attitude of the people of Turkey, which is very important to consider before setting up a business in Turkey in order to capture the people’s preference well. The business community in Turkey is widely affected by ethical climate, which has troubled them for a long time (Kriemadis, 2014). Ethical atmosphere has been at the critical stage for many years thus affecting the businesses, which are established in the region. The business managers differ a lot with respect to their gender. Females have high ethics as compared to their male’s counterparts. For Greece, the business environment is influenced by many factors. These factors include language, beliefs and other environmental and financial factors. Greece uses Greek as their official language. This language is very important in business since one will need to use it when doing business with the Greeks (Schweiger, 2014). The Greeks have the largest percentage of Christians who are approximately over seventy percent. The climate also influences the business thriving in Greece, with sometimes being cold, mild winters; hot, dry summers and snow can fall at sometimes. The attitude is also very important in establishing business with the Greeks. The countrys culture is quite homogeneous, but the Greeks business people normally perform business well with foreigners especially the young. They interact with visitors well and learn from their cultures and creates an enabling environment to perform business. Building a strong and lasting relationship and trust with Greeks is quite essential when doing business (Hatzidakis, 2013). The business relationships in Greece occur at a personal level and not with companies in doing business. Saving face is very important in business with Greeks, these establishing businesses. Business establishing in Greece is somehow challenging in the following ways. There is a low level of direct foreign investment in the country. This aspect slows down the market growth to the northern side of Greece. There is stifle between businesses due to the paradox inherent in various businesses in Greece. The other challenge facing business investment in Greece is the taxes levied on the foreign companies. This taxation has greatly affected negatively by the businesses establishment in Greece. There is also the case of transparency, where most Greeks do not have a good reputation. The labor hour policy, which was passed as a law in 2005, also poses a great a challenge to the business establishment in Greece. This labor law allows for more hour flexibility. The other problem posed to the Greek business is the property intellectual (Kriemadis, 2014). Many people will not bring the valuable intellectual goods. In the side of Turkey, there are various challenges to the business establishment. These challenges include bribery and corruption, which threatens great the growth of the business in the nation. Terrorism has also been a major challenge. There is a number of active terrorists in the country. The issue of property intellectual, like in Greece it is also a challenge in Turkey. Intellectual property in very essential in foreign business establishment. There has been number of organized crimes, which threatens business in Turkey. These crimes relate to the narcotics trading. Turkey being one of the countries being involved in transiting heroin into the Europe, it is faced with problems of crime organized drug traders opposing the law against the antinarcotics trading. Business financing in Greece occurs in many dimensions. Some of the possible ways of financing businesses includes the following. The bank financing has been the major source financier. There is also floating of companies on the stock exchange in raising funds for businesses. There are also investments frameworks, which finances the businesses in the country. Some cases there are tax relief, which greatly helps the investors in the region. There are also incentives, which affect greatly on the business investment. There are also European grants, which supports in investors. Finally, Athens chamber of industry and commerce. In Turkey, government incentives and finances offer some funding and tax incentives to the business investors. There are some benefits offered by the small business and medium. These benefits include tax exemption, credit allocation from the countrys budget, new credit support. There is also industrial, financial support, which greatly influences the business investors. The environmental development provides a funding to the renewable resources. The free trades zones encourage foreign investments by providing them with a number of incentives. These incentives include tax exemption, having no controls on foreign exchange, exempting income tax to the manufacturing companies. Finally, there is private financing which finances the investors. Greece fiscal quagmire came under the international focus in October 2009. This deficit worsened the situation significantly, which led to Greek economy getting into a recession. Greece has set up a European Support Mechanism to help in regaining its financial muscle. Greece has been effectively excluded from the world financial markets. To the side of Turkey, they have managed to come out of the stormy global crisis well and avoided collapsing. The economic reforms have greatly affected well in avoiding the collapse of the nation’s currency. 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 are still high in these countries. 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. 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, most analysts see the election of a new Prime Minister 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 the effort by Turkey and other countries towards handling the group which will ultimately benefit the country in attracting investors and other developers. Moreover, there have been warnings of vulnerability but the countrys policies have fared quite well in avoiding the repeat of that global crisis. There has been a clear roadmap since the 2001 crisis, which has enabled the country to recover swiftly. Macroeconomics has also gained stability and has helped to strengthen the fiscal and monetary policies. The labor market, trade liberalization, foreign and domestic investments have also shot up thus making the countrys economy stabilize again. In both Turkey and Greece, there have been some major impediments to the countries where citizens have been resisting the modernization (Jimmakos). For instance, Greeks had to demonstrate protesting the reforms. The country has overcome this by enlightening her people and creating awareness. There has been a challenge in restructuring, but the nations have as much as possible, by obtaining funds from the internal unions and World Bank. Questions Finally, to conclude this paper, I would like to generate some questions to ask during the trip. 1. The whole world is now being globalization, how can you corporate with other worldwide companies, and what are your pros/cons for competing internationally? 2. How will you overcome when some unexpected situations suddenly appear and interfere your plan? 3. How can you deal with the uncertain environment in Turkey, such as ISIS and is that widely affects business environment? 4. Since we are going to visit one of the EU countries, I would like to ask do you think EU benefits your business? In which aspects? 5. Since the corruption is a common element within business world, how can you best deal and solve this problem? 6. Do you think using joint venture with some closed countries is now best way to avoid certain risks due to the current economy situation? References Ardigó, I. A. (2015). Transparency International by Country. Retrieved 3 27, 2015, from http://www.transparency.org/country#TUR Chaulia, S. (2014). Politics of the Global Economic Crisis: Regulation, Responsibility, and Radicalism. London: Routledge. Ciro, T. (2013). The Global Financial Crisis: Triggers, Responses, and Aftermath. London: Ashgate Publishing. Eichengreen, B. J. (2012). The World Economy After the Global Crisis: A New Economic Order for the 21st Century. Singapore: World Scientific. Hatzidakis. (2013). Launch for competitive policy in Greece. Retrieved 3 27, 2015, from http://www.oecd.org/about/secretary-general/launch-of-the-competition-policy-assessment-of-greece.htm Ibrahim Sirkeci, J. H. (2012). Migration and Remittances during the Global Financial Crisis and Beyond. Washington: World Bank Publications. Jandieri, G. (2014). Reducing red tape in business would boost Greek productivity. Retrieved 3 27, 2015, from http://www.oecd.org/greece/reducing-red-tape-in-business-would-boost-greek-productivity.htm Jimmakos. (n.d.). www.oecd.org. Retrieved 3 27, 2015, from http://www.oecd.org/greece/44785912.pdf Kriemadis, T. (2014). Greece. Retrieved 1 26, 2015, from Greek business culture: http://businessculture.org/southern-europe/business-culture-in-greece/ Marois, T. (2012). States, Banks, and Crisis: Emerging Finance Capitalism in Mexico and Turkey. Camberley: Edward Elgar Publishing. Parlar, Z. (2014). Turkish business culture. Retrieved 3 27, 2015, from http://businessculture.org/southern-europe/business-culture-in-turkey/ Schiek, D. (2014). The EU Economic and Social Model in the Global Crisis: Interdisciplinary Perspectives. London: Ashgate Publishing. Schweiger, C. (2014). The EU and the Global Financial Crisis. Camberly: Edward Elgar Publishing. STOREY, W. (2012). Political Cultural, Historical in Greece. Retrieved 3 27, 2015, from http://issuu.com/transparencyinternational/docs/corruption_risks_in_europe/15?e=0 Vaughan-Whitehead, D. (2012). Work Inequalities in the Crisis: Evidence from Europe. Camberley: Edward Elgar Publishing. Read More