Small and Medium Enterprises (SMEs) in Turkey
1.0 Introduction
Small and medium-sized enterprises (SMEs) play a pivotal role in any developed economy and emerging market. The growing influence of SMEs in the global economy has reached an unprecedented scale and this paper aims to dive into the heart of SMEs in Turkey and examine the inherent working mechanism that is the engine for growth. SMEs in Turkey are an increasingly important feature of the economy, representing 99% of all enterprises in the country. As such, this paper aims to evaluate their role and importance in the Turkish economy, understand defining characteristics of the industry, and examine key trends for the future. The SME sector in Turkey is defined according to the number of employees, turnover and balance sheet. As such, SMEs are defined as follows:
Figure 1: Definition of SMEs
2.0 The role of SMEs in the Turkish Economy
Accounting for 79% of all employment in Turkey, SMEs are central to creating jobs for an underutilized and growing labour force in the country. Notably, SMEs and self-employment are also one of the only sources of employment for the poor, further emphasizing the importance of the SME sector for job creation.
Traditionally, SMEs have also been largely dependent on the domestic market. Their strong presence in the country is a result of the competitive advantage arising from their location in Turkey, allowing them to internally produce high-quality products at a lower cost and gain easy access to the Turkish market. Additionally, being located in Turkey allows them to gain a strong understanding of the market, and meet precisely its demands. Their small size also allows them to cater to niche markets and produce in small quantities, collectively addressing a large pool of the nation’s demands.
As Turkey gradually opened its economy to foreign companies, key industries like automobile manufacturing and heavy industries expanded rapidly. SMEs fill an important gap in the supply chain by serving as
Small and medium-sized enterprises (SMEs) play a pivotal role in any developed economy and emerging market. The growing influence of SMEs in the global economy has reached an unprecedented scale and this paper aims to dive into the heart of SMEs in Turkey and examine the inherent working mechanism that is the engine for growth. SMEs in Turkey are an increasingly important feature of the economy, representing 99% of all enterprises in the country. As such, this paper aims to evaluate their role and importance in the Turkish economy, understand defining characteristics of the industry, and examine key trends for the future. The SME sector in Turkey is defined according to the number of employees, turnover and balance sheet. As such, SMEs are defined as follows:
Figure 1: Definition of SMEs
2.0 The role of SMEs in the Turkish Economy
Accounting for 79% of all employment in Turkey, SMEs are central to creating jobs for an underutilized and growing labour force in the country. Notably, SMEs and self-employment are also one of the only sources of employment for the poor, further emphasizing the importance of the SME sector for job creation.
Traditionally, SMEs have also been largely dependent on the domestic market. Their strong presence in the country is a result of the competitive advantage arising from their location in Turkey, allowing them to internally produce high-quality products at a lower cost and gain easy access to the Turkish market. Additionally, being located in Turkey allows them to gain a strong understanding of the market, and meet precisely its demands. Their small size also allows them to cater to niche markets and produce in small quantities, collectively addressing a large pool of the nation’s demands.
As Turkey gradually opened its economy to foreign companies, key industries like automobile manufacturing and heavy industries expanded rapidly. SMEs fill an important gap in the supply chain by serving as
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