Turkey Country & Education Sector Report

Country & Education Sector Profile
Republic of Turkey

Educational Holding Group
March 2010


Chamber of Commerce,

P.O. Box 27215, Safat,

13133, Kuwait

Tel: +965-2224-0453

Fax: +965-2240-7048

http://edu.com.kw/

Adel Ansari

Investment Analyst

Investment Department


Republic of Turkey Page 2

Summary

This Report was prepared to look at investment opportunities in Turkey, in field of education.
The report provides details of Turkey as an investment destination by understanding the current,
economic, political & legal situation in the country and analyzing future prospects. It also looks in
detail in the education sector of the country.

Turkey is one of the major economies of EU and has strong fundamentals, although it has been
impacted by current financial crisis it is slated to overcome it. The education sector in the
country face challenges in terms of meeting the high standards set by the EU countries. There is a
good education infrastructure however it is not sufficient to fulfill the growing need for
education. Government of Turkey has pushed for more participation by private sector, which
currently only contributes 4 % of the total education infrastructure; there are still great unmet
demands.

K -12 level is also lagging in some regions and with a huge base population as the target, it forms
an attractive target sector. Istanbul with a significant gap in School education, and high Per
Capita Income has good opportunity for high quality private education.


Contents
Topic Page Number

1.0 Country Brief

1.1 Country Summary 6

1.2 Demographics 6

1.3 Political Stability 7

1.4 Economic Stability 7

1.5 Impact of Financial Crisis 8

2.0 Economy

2.1 Macroeconomic Indicators

2.1.1 Gross Domestic Product 9

2.1.2 Per Capita – Gross Domestic Product 10

2.1.3 Inflation 11

2.1.4 Public Finance 12

2.1.5 Labor Force 13

2.1.6 Foreign Direct Investment 14

3.0 Education Sector

3.1 Education System 16

3.2 Education Expenditure 18

3.3 Education Statistics

3.3.1 Enrollment Rate 21

3.3.2 Eligible Population 21

3.4 School Statistics

3.4.1 Students Growth Rate 21

3.4.2 Gap Analysis- Eligible Population 21

3.4.3 Gap Analysis – Eligible Population Grade wise 22

3.4.4 Number of Schools 23

3.4.5 Gap Analysis- Number of Schools 23


3.5 Regional Analysis

3.5.1 Regional Analysis – Eligible Population 24

3.5.2 Number of Schools 25

3.5.3 Regional Gap Analysis- Number of Schools 26

3.5.4 Regional Gap Analysis- GDP per Capita 27

3.5 Gap Analysis – Quality & Occupancy

3.6.1 Students School Ratio 28

3.6.2 Students Teacher Ratio 29

3.6.3 The Estimated Gap 29

3.6.4 Affordability vs. Gap 30

3.7 Sectoral Analysis

3.7.1 Sector wise Breakdown- Number of Schools 32

3.7.2 Sector wise Breakdown- Number of Student 32

3.8 Higher Education Statistics

3.8.1 Eligible Population 33

3.8.2 Higher Education Brief 33

3.8.3 Higher Education – Number of Students Growth Rate 34

3.8.4 Higher Education Analysis- Eligible Population 34

3.8.5 Higher Education – Enrollment Rate 35

3.8.6 Higher Education – Number of Students Breakdown 36

3.8.7 Higher Education Gap Analysis 36

4.0 Strategy

4.1 Overview 38

4.2 Target Sector Analysis 38

4.3 Target Region Analysis 39

5.0 Analysis

5.1 SWOT Analysis 40

6.0 Legal

6.1 Laws for Foreign Direct Investment 41

6.2 Taxation Laws 42


Country Brief

1.1 Country Summary

Turkey is a new country in old land; it was formed from the remnants of Ottoman Empire. It is a democratic,
secular, and constitutional republic. Its political system was established in 1923 under the leadership of
Mustafa Kemal Ataturk, following the fall of the Ottoman Empire in the aftermath of World War I. Turkey
joined the UN in 1945 and in 1952 it became a founding member of NATO; it holds a non-permanent seat on
the UN Security Council from 2009-10. In 1964, Turkey became an associate member of the European
Community.

Turkey is a bridge between east and west, it is strategically located. Geographically, Turkey is located in
between Asia and Europe. The smaller northwestern portion (Thrace) is part of Europe, while the larger
portion (Anatolia) is part of Asia. Turkey’s proximity to Europe in west and Russia, Iran and Syria in east makes
it important for peace and understanding. Also because of its location it has become an important transit
route for gas.

Ankara is the capital city of Turkey and second largest city after Istanbul. The official language of Turkey is
Turkish however other minority languages such as Kurmanji (Northern Kurdish) are also spoken by large
number of people. Turkey is a secular state with no official state religion; the Turkish Constitution provides for
freedom of religion and conscience. However the majority of population is Muslim, according to 2009 data on
the world's Muslim populations, around 98% of the total population in Turkey are Muslim.

Turkey is a dynamic emerging-market economy and a member of the Organization for Economic Co-operation
and Development (OECD). Turkey has the 15th largest GDP in terms of Purchasing Power Parity; its GDP Per
Capita in terms of Purchasing Power Parity is much higher at US$ 13,111 which indicates that Turkey is an
upper middle income country. Over 70 percent of its population lives in urban areas Turkey successfully
recovered from a deep economic crisis in 2001.

Source: World Bank


1.2 Demographics

Turkey’s population in 2009 was 72.56 million compared to 71.52 million in 2008 and 70.59 million in 2007.
The Turkish population since 2000 has grown at an average of 1.35%.

The population breakdown shows that in 2009 around 31.37 million of this population was less than 24 years
which was around 43 % of the total population and also around 17.93 million was in 25 - 39 age groups.

Chart 1: Total Population ( In Millions) Chart 2: Population Breakdown- 2009
(Source: Turkstat) ( In Millions)
73.00 (Source: Turkstat)
72.56
Total Population under 24 was 31.37 million or 43%
72.50
of the Total Population

72.00
71.52
7.44 6.16
71.50 6.20
15.82 6.50
71.00
70.59
6.23
70.50
6.28
17.93
70.00

69.50
2007 2008 2009
0 to 4 5 to 9 10 to 14 15 to 19
Total Population 20 to 24 25-39 40-59 60+

The population projection estimates that Turkish population will grow to 83.5 million by 2025. Despite a
significant demographic shift expected in Turkey the under 24 population by 2025 is estimated to be around
30.8 million.

Chart 3: Total Population Projections
(In Millions)
Source: Turkstat

By 2025 the population under 24 is estimated to be around 30.8 million
85. 83. 57
80. 26
80. 76. 6
75. 72. 7
71. 08
70.
65.
60.
2008 2010 2015 2020 2025
Mid-year Total Population Projections


1.3 Political Stability

Turkey is a parliamentary representative democracy, since its foundation as a republic in 1923. The head of
state is the president; however the executive powers stay with Prime Minister. After a period of one-party
rule, 1950 election saw multi party system prevailing. Since then, Turkish political parties have multiplied.
Turkey is the founding member of NATO and is a temporary member of UN Security Council. Turkey’s internal
politics is stable; as per foreign relations Turkey has conflict with Kurd fighters based in Iraq. In 2007 Turkey
launched an airstrike and followed it by ground invasion against Kurd fighters in northern Iraq. Turkey also has
an ongoing conflict with Cyprus over northern Cyprus; it maintains its troops in the island. None of its conflicts
are grave and threaten an immediate disturbance; overall Turkey is a political stable country.

1.4 Economic Stability

Turkey is closely related with world economy and has proximity with Europe and Asia alike. It has a track
record of good economic management and structural reform that drives its long-run economic prospects. Due
to its close relations with the world economy, through both trade and financial channels, Turkey was also
seriously affected by the global recession since the fourth quarter of 2008.

Over 70 percent of its 72.5 million people live in urban areas. Agriculture accounts for only 9 percent of its
GDP, industry for 22 percent, and services for 69 percent. Turkey’s economy is among the world’s 20 largest,
with a GDP in 2008 of over US$790 billion. GDP per capita now exceeds US$9,300. Extreme poverty (those
living at below US$1.25 per day) is minimal in Turkey, but poverty remains significant around 18.5 percent in
2007. Turkey although going through crisis like most of the world economies still remains stable with sound
fundamentals.

Source: World Bank, International Monetary Fund

1.5 Impact of Financial Crisis

Turkey is not strange to macroeconomic crisis. The previous crisis in 2001 saw public debt climbed to 80% of
the GDP. The Turkish economy showed resilience and was out of the crisis. However the current crises are far
more widespread and need a consolidated effort from all the major economies in the world to crawl back to
normalcy.

Turkey is an open economy with trade contributing more than 50% of GDP and exports in 2008 were nearly a
quarter of GDP, with more than half the export going to EU. Since EU is itself in deep recession there is sharp
decline for goods from Turkey, this has in turn affected investment & credit flow adversely. Portfolio flows
too turned negative with an outflow of nearly $5 billion in 2008.

The slow recovery of export sector and some protectionist measures by major economies have made it even
more difficult for Turkey. However, Turkey has been among the country that has not suffered as much as
worse hit economies. With positive data coming out of USA and other major economies recovery has begun
and with effective management by Turkish authorities using their previous experience of similar situation,
Turkey is poised to be among the first in EU to recover. The fundamentals of the economy remain strong.


 Young and Dynamic Population with over 31 million people (43% of the total Population) under the
age of 24.
 Despite Demographic Shift, the population under 24 will remain significant.
 It is Parliamentary Representative Democracy and overall is politically stable.
 Strong Economic Fundamentals and closely integrated with world economy.
 Among world’s 20 largest economy with a GDP of over US$ 790 Billion.

Economy

2.1 Macroeconomic Indicators

2.1.1 Gross Domestic Product

Turkey has the 15th largest GDP in terms of Purchasing Power Parity and 17th largest in terms of Nominal GDP.
The Nominal GDP in 2008 was at US $729 billion.

Chart 4: Gross Domestic Product
800.00 Source: International Monetary Fund (IMF) 12.0%
9.4%
700.00 8.4% 10.0%
6.9% 8.0%
600.00
4.7% 6.0%
3.7% 4.0% 3.5% 3.5% 3.5%
500.00 0.9%
729.98 4.0%
400.00 2.0%

710.83
673.75
649.13

638.42
610.47
593.53

590.70
0.0%
529.19

300.00
482.69

-2.0%
392.21

200.00
-4.0%
-6.5%
100.00 -6.0%
- -8.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

*IMF Staff estimation Gross domestic product, current prices (US $ Billions)
from 2009 onwards
Real Gross Domestic Product Growth Rate (Percentage)

The ongoing global economic downturn has hit Turkey hard. Real GDP growth rate was just 0.9% in 2008 as
against 4.7 % in the previous year and was lower than the average Real GDP growth from 2004 -2007 of
around 7.3%.

This implies stagnant per capita income; also the Turkish economy contracted in the fourth quarter of 2008 by
6.2 percent relative to one year earlier and year-on-year quarterly growth fell further to -13.8 percent in the
first quarter of 2009, However by mid 2009 there were signs of recession bottoming out and positive data was
flowing in from US. Despite these positive signs, the Turkish economy is expected to shrink. IMF estimates a
steep decline in Real GDP growth rate in 2009.

The government’s response has combined monetary easing with foreign-exchange liquidity and confidence
building measures in the financial sector (banks are well-capitalized and well-regulated), some employment
measures, and temporary tax cuts.

On comparison it shows that Turkish Economy has not been hit as badly as some other OECD high income
economies or Euro economies; it has performed better than others in the area. Turkish Nominal GDP growth
was higher than the High Income OECD average of 0.69%, Euro area average of 0.73% and world average of
2.01 %.

Source: IMF, World Bank.


2.1.2 Gross Domestic Product - Per Capita

Turkey saw a surge in GDP Per Capita Income (Current Prices) from 2004 onwards, in 2008 it was at 10,479
US$. It’s GDP Per Capita in terms of Purchasing Power Parity is much higher at US$ 13,139 making it an upper
middle income country.

Chart 5: GDP - Per Capita
16,000 Source: International Monetary Fund (IMF)

14,000

15,213
14,577
13,966
13,405
12,000

13,139
12,891

12,849
12,339
12,107

10,000
11,006

10,479
9,844

9,551
9,422
8,000

9,153
8,769
8,478
8,427

8,295
7,767

6,000
7,108
5,862

4,000
2,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

*IMF Staff estimation Gross domestic product per capita, current prices (US$)
from 2009 onwards
Gross domestic product based on purchasing-power-parity (PPP) per capita (US$)

Due to financial crisis the growth has been downward. IMF estimates that in 2009 the nominal GDP to shrink
by US $ 593 billion and further to US$ 590 billion by 2010. However the GDP Per Capita as per Purchasing
Power is estimated to remain strong.


2.1.3 Inflation

Turkey has witnessed high inflation rates throughout its period of development. It has been one major area of
concern for the Turkish economy. Annual Inflation which was at around 8.3% in 2007 rose to over 10% at the
end of 2008 remaining above the upper limit of uncertainty band. The events in global economy became main
determinant of inflation throughout 2008 which became 11.1 percent by September 2008. Despite the
considerable increase in exchange rate in last quarter of 2008, the effect of this on prices remained below
levels of previous years, due to slowdown in import prices.

In the first quarter of 2009 positive development on cost based effects and further slowdown in economic
activities , the annual rate of inflation maintained its downward trend. By March it reached a level of 7.89%
which was well within the uncertainty band, IMF projected the annual rate to further go down to 6.2% by end
of year. However Inflation dropped to 5.73% in June below the lower bound of uncertainty band set at 6.8%.


Chart 6: Inflation (Current & Projected)
Source: IMF, Turkstat
12.00% 10.44%

10.00% 8.75%

8.00% 6.78%
6.20%
5.74%
6.00% 4.66%
4.00% 4.00%
4.00%

2.00%

0.00%
2007 2008 2009 2010 2011 2012 2013 2014

Average Consumer Price (Percentage change)

The future forecast projected by IMF for Turkey projects that average consumer prices will decline in price rise
and has projected it to be at around 4% till 2014.

However, commodity price have picked up during April and May this year amid hopes of an earlier than
expected recovery, higher demand boosted by China & India and weaker dollar.

The outlook of inflation in Turkey much depends like all the major economies on growth and recovery of
economies across. After reeling under high inflation for a long timer the financial crisis has for once got
Turkey’s inflation rate within uncertainty band but this may not be very desirable for the Turkish economy as it
looks to push itself out of the financial downturn with increased demand, internally as well as globally.

Source: International Monetary Fund, Turkstat

2.1.4 Public Finance

Central Government budget revenue and primary expenditure rose by 9.7 and 12.9 percent respectively in
2008. As the rise in total expenditure became 10.7 percent, the ratio of expenditures covered by revenues
decreased by 0.9 percentage points compared to 2007.

Table 1: Government Budget Performance (In Billion TL)
2007 2008 % Change Jan-Apr 2008 Jan- Apr 2009 % Change
Expenditures 204.1 226 10.7 70.2 87.4 24.5
Interest Expenditure 48.8 50.7 3.9 17.9 21.1 17.9
Primary Expenditure 155.3 175.3 12.9 52.3 66.3 26.8
Revenues 190.4 208.9 9.7 64.8 6748 4
Tax revenues 152.8 168.1 10 53.2 51 -4.1
Revenues to Expenditure 93.3 92.4 -0.96 92.3 77.1
Budget Deficit -13.7 -17.1 24.8 -5.4 -20.1 272.2
Primary Surplus 35 33.6 -4.1 12.5 1.1 -91.2
Source: Central bank of Turkey


In 2008 the largest increase in primary item was due to capital expenditure because of investment GAP. Tax
revenue went down on account of low domestic demand. However the central government budget deficit was
just below target due to increase in capital funds at TL 7.3 billion were transferred from Privatization and
unemployment fund. In 2009, there was a trend of an evident increase in budget deficit, which is because of
fiscal measures taken by Turkey to alleviate the effect of downturn. In first four months of 2009 while
expenditure increased by 24.5 percent revenues just rose by 4 percent. The ratio of expenditure covered by
revenues went sharply down to just 77.1 percent. Primary and interest expenditure increase had the maximum
impact as they rose by 26.8 and 17.9 percent respectively.

However this has been an extraordinary period with fiscal measure taken against financial crisis had their
implication on budget deficit.

Source: Central Bank of Turkey, International Monetary Fund

Chart 8:Public Debt (% of GDP)
Source: Central Bank of Turkey
60
49.00
50 41.60
40 34.00
29.50 28.60
30
35.6
13.4

20
35.1

28.1

26.5
30
6.5

10
1.4

2.1
4

0
2004 2005 2006 2007 2008
Net External Debt Net Domestic Debt Total Public debt

The ratio of public net debt stock to GDP declined and became 28.6 percent at the end of2008. The domestic
debt stock included in 2008 was TL floating Rate debt 42.5% TL fixed rate debt 45.9% .CPI indexed bonds at
3.2% and FX indexed bond at 6.4%. This composition didn’t change much in 2009.

Given the current economic development, rising budget deficit is a worldwide phenomenon. In the first four
month of 2009 the central government budget was parallel to the macroeconomic developments and to fiscal
measure enforced to contain the financial crisis.

Source: Central Bank of Turkey


2.1.5 Labor Force

Chart 9: Labor Force (in '000)
Source: International Labor Organisation

45,000
40,000
40,330 41,085
39,550 39,813
35,000 39,169

30,000
25,000
20,000 22,046 22,330
21,791 20,738 21,194
15,000
10,000
2,498 2,519 2,446 2,376 2,611
5,000
0
2004 2005 2006 2007 2008

Economically Active Populationbetween age ( 20-64)
Total employment over 15 years
Total Unemployment

Out of total economically active population of around 39 million in 2008, 21 million people of age over 15
years were employed. The unemployment rate in 2008 was around 10.7 %, higher than last year’s rate of 10
percent. Turkey has since 2004 had a high unemployment rate, with the average unemployment rate of 10.2
percent for last 5 years. Still Turkey is the 5th largest labor force amongst EU countries. Turkey has a young
and dynamic labor force with the average age of 28.5 years

Table 2: Labor Force Breakdown Industry wise (In '000)
INDUSTRY GROUP 2004 2005 2006 2007 2008
Agriculture& Fishing 7,400 6,493 6,087 4,867 5,016
Mining 104 118 130 127 115
Manufacturing 3,801 4,083 4,187 4,088 4,233
Electricity, Gas, water 83 79 92 97 92
Construction 1,029 1,171 1,267 1,232 1,242
Wholesale & Retail 3,307 3,610 3,731 3,568 3,576
Hotels & Restaurant 872 937 1,000 989 999
Transport & Storage 1,100 1,131 1,162 1,135 1,089
Financial 237 238 237 249 259
Real estate 549 634 773 806 910
Public Administration & defense 1,252 1,246 1,225 1,260 1,265
Education 818 905 907 869 920
Healthcare 469 530 590 561 594
Other community services 583 871 942 890 884
Unemployed seeking their first job 612 553 490 430 394
Unemployed previously employed 1,886 1,967 1,956 1,946 2,217
Unemployed 2,498 2,519 2,446 2,376 2,611
Source: International Labor Organization


Agriculture has historically employed a large number of labor forces however it is declining as more and more
labor force move towards other employment avenues. It has reduced from 34% of total labor force to around
23 % in 2008. Other important sector for employment has been manufacturing. Manufacturing in 2008
employed around 4.2 million of the total labor force which was around 20% of the total labor force as against
18 percent in 2004. Manufacturing has increased its share when it comes to employment; however it is the
hardest hit sector by financial crisis hence large number of unemployment in this sector is inevitable.

Source: Turkstat, International Labor Organization

2.1.6 Foreign Direct Investment

Table 3: Foreign Direct Investment (Millions of USD)
2005 2006 2007 2008
FDI Flows
Inward 10,031 20,185 22,046 18,198
% Gross Fixed Capital Formation 17.10 15.60 12.30
Outward 1,064 924 2,106 2,585
% Gross Fixed Capital Formation 0.80 1.50 1.70
Net FDI Inflows 8,967 19,261 19,940 15,613
Average Net FDI Inflow last 4 years 15,945
Source: United Nations Conference on Trade and Development (UNCTAD)

FDI inflow has been steady in Turkey; the average FDI inflow reached a high of US$ 22 Billion in 2007, however
due to financial crisis the FDI inflow has been affected. The net inflow for 2008 was at US$ 15 billion for the
year 2008 compared to over US $ 19 billion last year. Turkey has seen good FDI inflows and hence it is an
important part of current account deficit. The inflows further decreased in 2009 averaging about 1 Billion US$
for first 2 months. The Central Bank of Turkey has set a target of US$ 10 Billion for 2009, which would account
for 40-50 percent of current deficit.

Turkey also dropped 10 places in World Bank Doing Business Report in ease of doing business. Turkey was
ranked at 73 out of 183 economies for the year 2010 as compared to 63 for the year 2009.

Source: Reuters, World Bank


Turkish economy has had its share of crisis since 2001 and recently it has been impacted by global meltdown,
however it has shown resilience and strong fundamental. Turkey has the 15th largest economy in the world
and has a high GDP Per Capita Income of US$ 9,300. It is poised for recovery earlier than any other EU
countries.

Inflation has been a problem for Turkish economy. Current situation has helped it curb inflation but it is not
desirable. As economy starts recovering the government will have to maintain a check on inflation.

Overall with strong FDI flow and positive signs, Turkey is set to continue being an emerging market and better
placed than most of the other EU neighbors. This growth will fuel the need for better and bigger education
infrastructure.

 Among 20 Largest Economies in the world with GDP of over US$ 790 Billion in 2009
 An upper middle income group country with GDP per capita of over US$ 13,000 in 2009
 Historically high inflation however got in control due to global meltdown. It is expected to rise once
demand grows and economic growth picks up.
 High unemployment rate of 10.7% in 2008
 Average FDI inflow for last 4 years was around US$15.9 Billion


Education Sector
3.1 Education System

The Turkish National Educational System is composed of two main sections: Formal Education and Non-formal
Education.

Formal Education

Formal education is the regular education of individuals in a certain age group and given in schools. This
includes Pre-Primary education, Primary education, and Secondary education and Higher education
institutions.

Pre-Primary education

Pre-Primary education is an optional education for children between 3-5 years of age who are under
the age of compulsory primary education.

Primary Education

With a new Law in 1997, eight years of Primary school is compulsory today (former system was five
years of compulsory primary school, followed by three years of middle or junior high school
education). Primary education is compulsory for all boys and girls at the age of 6-14, and is given free
of charge in public schools. These schools provide eight years of uninterrupted education. There are
also private (and paid) schools under State control.

Secondary Education

Secondary education covers general, vocational and technical high schools) that provide four years of
education (used to be 3 years until 2005).It is optional for students from 15-19 years of age. General
high schools prepare students for higher learning institutions. Some of the secondary schools and the
private secondary schools have foreign language preparatory classes.

Higher Education

Graduates of the high schools can attend universities if they can pass admission exams. Universities,
faculties, institutes, higher education schools, conservatories, vocational higher education schools,
police and military academies and colleges, and application-research centers are considered as Higher
Education institutions.

Non Formal Education

Non-formal education in Turkey is offered by a network of training centers that are supervised by the Ministry
of National Education (MEB). Non-formal education services aim to teach reading-writing, help to continue
education of students for finish their incomplete education, teach balanced nutrition and a healthy life style,
teach people from various professions the knowledge and skills they need to improve themselves, and so on.


The Turkish National Education System

27 Doctorate Masters

26 3 years (Medical Specialization)4 years

25
Masters
24 2 years Open Education
Under Graduate

23 Under Graduate (Diploma)
(General/ Vocational)
22 5 years
4 years
21

20 Preparatory Class (Compulsory for some University)

19 Age (6-14) Secondary
18 Secondary Secondary
(Vocational/ Technical)
17 (Normal /general) (Science High School)
5 years
16 4 years 4 years

15

14 Preparatory Class ( Optional in Some Schools)

13 Age (6-14)
Primary Education (Compulsory)

8 years
6

5
Pre Primary Education (Kinder Garten & Nursery)
3
2 years
Age

Source: Governorship of Kocaeli- Turkey


3.2 Education Expenditure

Government lays strong emphasis on education and is committed to improve education for all. Turkish
government allocates funds from Central Government Budget for Ministry of National Education (MONE) and
Higher Education Council (HEC), which overlook disbursement of allotted funds. On an average the Turkish
Government for last three years provides funds close to 3.15% of GDP every year to MONE and HEC. There has
been a consistent increase in the government expenditure on education from 22.4 Billion Turkish Lira (TL) in
2006 to 36.65 Billion TL in 2009 at an average growth rate of 18%.

Chart 10: Budget allocation for Education ( Billion TL)
Source: Ministry of National Education ( MONE)
36.65
40 30.22

8.77
27.9
22.4

7.31
30
6.58
5.84

20

27.88
22.91
21.35
16.56

10

0
2006 2007 2008 2009

Ministry of National Education Budget Higher Education Council Budget

Chart 11: Education Expenditure Percentages
16.00% 13.98%
13.57% 13.58%
14.00% 12.80%

12.00%
10.00%
8.00%
6.00%
3.00% 3.30% 3.00% 3.30%
4.00%
2.00%
0.00%
2006 2007 2008 2009
Total Education Budget Percentage of Central govt. budget
Total Education BudgetPercentage of GDP

The Total Government expenditure on education in 2009 was 13.98% of Total Central Government and 3.30%
of the Total GDP. This indicates that there was no change in government policy towards education despite the
financial crisis. The government continued with same levels of expenditure as percentages of Total Budget and
GDP.


Table 4: Ministry of National Education Budget Description ( Billion TL)
Budget Breakdown 2007 2008 2009
Total MONE budget 21.35 22.91 27.88
Personnel Expenditure 13.48 15.4 18.48
Insurance Premium 3.16 1.81 2.13
Goods & Services 1.19 2.21 2.86
Current Transferable 1.9 2.07 2.47
Capital Expenditure 1.48 1.26 1.5
Capital Transfers 0.106 0.147 0.419
Source: Ministry of National Education

The budget breakdown shows the total breakdown of expenditure of the allotted budget to Ministry of
National Education (MONE). MONE on an average for last three years spends around 65% of the total allotted
budget on Personnel i.e. staff and teachers salary and around 10% on insurance premium. MONE also spends
on an average around 6% every year on capital expenditure to fill the gap in education.

Table 5: Higher Education Council Budget Description ( Billion TL)
Budget Breakdown 2007 2008 2009
Total Higher Council budget 6.58 7.31 8.77
Personnel Expenditure 3.41 3.85 4.572
Insurance Premium 0.77 0.505 0.565
Goods & Services 1.026 1.36 1.561
Current Transferable 0.0856 0.0992 0.2092
Capital Expenditure 1.28 1.49 1.863
Source: Ministry of National Education

Higher Education Council (HEC) has on an average spent around 52% on personnel i.e. staff and teachers for
last three years. HEC has been active in fulfilling the education gap as it has allocated on an average around
20% of the total expenditure on capital expenditure.


Chart 12: Investment Budget of Ministry of National Education ( Billion TL)

0.23%
1.6 0.22% 0.25%
1.4 0.18%
1.2 0.20%
1 0.13%
0.15%
0.8
0.6 0.10%

1.29
1.24

1.49
0.4 0.05%

1.5
0.2
0 0.00%
2006 2007 2008 2009

Investment Budget of MONE ( Billion TL) MONE Investment %of GDP

The investment made by Ministry of National Education (MONE) in 2009 was around 1.5 Billion Turkish Lira
(TL) compared to 1.29 Billion TL in 2008 and 1.49 Billion TL in 2007. The investments by MONE were 0.13% of
GDP in 2009 and 0.575 of the Total Central Government Budget in 2009. The total investment of central
government in 2009 was around 13 Billion TL and compared to around 8 Billion TL a substantial increase of
over 50%. However out of this total investment of central government in 2009 around 5.3 % was investment
made by MONE in education as stated above in the chart.

3.3 Education Statistics

3.3.1 Enrollment Rate

Chart 13: Enrollment Rate in Schools
Source: Turkstat
120.0 97.4 96.5
89.8 90.1
100.0
80.0 58.6 58.5
56.6 56.5
60.0
40.0
20.0
0.0
2006 2007 2008 2009

Primary Secondary

The enrollment rate for primary is higher as it is compulsory however the enrollment rates for secondary drop
below 60%.


3.3.2 Eligible Population Breakdown

The population eligible for school education is between the age brackets of 3 – 19 years. Below is the grade
wise breakdown of the eligible population.

Table 6: Eligible Population (Millions)

Pre Primary Primary Secondary
(3 to 5) (6 to 14) (15 to 19) Total

2007 3.60 11.56 6.16 21.32

2008 3.66 11.53 6.19 21.37

2009 3.70 11.46 6.23 21.40
Source: Turkstat

3.4 Schools Statistics

3.4.1 Number of Students

Chart 14: Number of Students- Turkey
15.40 Source: Turkstat 15.35

15.30
15.20
15.10
15.00
14.87
14.90 14.82
14.80
14.70
14.60
14.50
2007 2008 2009
Number of Students( Millions)

*Note: 2007 is the base year for Growth Rate

The total number of students throughout all schools in Turkey up till secondary has grown to over 15.3 million
in 2009 from 14.82 million in 2008. The growth Rate for 2009 was 3.61% compared to negative growth of
0.38% in 2008.


3.4.2 Gap Analysis- Eligible Population

Chart 15: Gap Analysis - Number of Students- Turkey
Source: Turkstat
25.00

20.00
6.56 6.05
6.45
15.00

21.37

21.40
21.32
14.87

10.00

14.82

15.35
5.00

-
2007 2008 2009
Gap
( millions) Number of Students( Millions) Eligible for Education- Age 3-19 ( Millions)

The total number of existing students in all the schools across Turkey when compared to population eligible for
education (age group of 3-19) gives a gap in number of students who need education. The total eligible
population for schools in 2009 was around 21.40 million while only 15.35 million were accommodated by all
schools across Turkey.

3.4.3 Gap Analysis – Eligible Population - Grade wise

Chart 16: Gap Analysis (2009) - Grade wise
Source: Turkstat
14.00
12.00 0.75
10.00
8.00
11.46
10.71

6.00 2.40
2.90
4.00
6.23
3.84

2.00
0.80

3.70

-
Pre Primary ( 3-5) Primary (6-14) Secondary (15 -19)
Gap
( millions) Number of Students ( Millions) Eligible Population ( Millions)

There was a total gap of around 6.05 million students in the age group of 3-19 i.e. 6.05 million children didn’t
have access to formal schools. Out of the 6.05 million the highest gap was in pre –primary and secondary
education, leaving around 2.90 million children this may be because pre primary education is optional,
however importantly around 1 million students every year would graduate to primary education level.

Primary education had minimal gap, the reason was that primary education for 8 years is made compulsory
and free by Turkish government. At secondary level there is a high gap of around 2.40 million students, this is
because the student dropout rate is higher as secondary education is not made compulsory by government.


3.4.4 Number of Schools

Chart 17: Number of Schools- Turkey
Source: Turkstat
66,500 232
66,000
65,500 228
65,000
64,500

66,097
64,000
235

64,879
63,500
63,000
63,265

62,500
62,000
61,500
2007 2008 2009
Average Number of
Students Per School 2007 2008 2009

The total number of Schools in 2009 increased to over 66,000 across Turkey from 64,879 in 2008.

The average number of students per school was 232 in 2009, 228 in 2008, and 235 in 2007. Hence the average
number of students to schools for last three years is 232.

Number of Schools by Grade- 2009
Source: Turkstat
40,000
317
35,000
30,000
34
25,000
20,000
33,769
15,000
23,653 442
10,000
5,000 8,675
-
Pre Primary Primary Secondary
Average Number of
Students Per School Number of Schools

The Total number of schools in 2009 was 66,097 out of which Primary grade schools were around 33,769 and
only 8,675 schools in Secondary Grade. The average number of students in pre primary schools was very low at
34 students per school because this is an optional stage of education, whereas the average students per school
for primary was around 317 and even higher for secondary education which was 442 students per school. This
shows that there is lack of infrastructure for secondary schools.


3.4.5 Gap Analysis – Number of Schools

Chart 18: Gap Analysis- Number of Schools- Turkey
Source: Turkstat
100,000

80,000 27,285 26,179
28,676

60,000

91,941

92,276
63,265

92,164

66,097
40,000

64,879
20,000

-
2007 2008 2009

Gap Number of Schools Required Number of Schools

Considering the total eligible population entitled for education as 21.4 million in 2009 (Refer to chart 15), out
of which only 15.35 million are accommodated by 66,097 schools. Also, considering the average number of
students per school for the last three years as 232, (Refer to chart 17) it shows that, if all the eligible
population were to be accommodated at the rate of 232 students per school then there is requirement for
additional 26,179 schools other than the existing 66,097 schools all across to fulfill the need of education for
all the population entitled for it.

3.5 Regional Analysis

3.5.1 Regional Gap Analysis – Eligible Population

Chart 19:Gap Analysis - Number of Students (2009 ) Regionwise
Source: Turkstat

4.00 0.90 1.54
1.06
3.50
3.00 0.62 0.72 0.31
2.50 0.63 0.27
3.58
2.00
3.26

3.52
2.15

2.31

1.50
2.61
2.18
2.36

2.20

2.04
2.00
1.88
2.04
1.74

1.00
1.46
1.41

0.50
-

Gap
(Millions) Number of Students ( Millions) Eligible Population ( Millions)

The highest difference between number of existing students and eligible population for education is in Central
Anatolia , Istanbul and Southeastern Anatolia of 1.06 million, 0.90 million and 1.54 million respectively in each
of provinces.


However the highest numbers of students are in Istanbul which is 2.6 million students in all the schools
throughout Istanbul, this is mainly because apart from being the largest city and former political capital of the
country, Istanbul has always been the centre of Turkey's economic life, this is because of its location as a
junction of international land and sea trade routes. Istanbul is also Turkey's largest industrial centre; it employs
approximately 20% of Turkey's industrial labor and contributes 38% of Turkey's industrial workspace. Hence
Istanbul has a high population as it attracts people from all around Turkey.

The total population in Istanbul for 2009 was around 12.9 million with population in age group of 3-19 (eligible
population) at 3.52 million which was only second to Southeastern Anatolia at 3.58 million of eligible
population.

Southeastern Anatolia had the highest gap in number of students and eligible population which was around
1.54 million; this can be attributed to the economy of Southeastern Anatolia which is largely based on
stockbreeding, agriculture and also some oil production because of which Per Capita Income in Southeastern
Anatolia is lower than the average national Per Capita Income. Hence affordability for private education is low
and public infrastructure is insufficient.

3.5.2 Number of Schools

Chart 20:Average Number of Students Per School- Regionwise
Source: Turkstat
12,000 600
9,725 9,528
10,000 9,076 8,854 500
8,439 544 8,098
7,575
8,000 400
6,000 4,802 300
4,000 248 247
200
207 226 231
2,000 155 154 100
- -

Number of Schools(2009) Average Number of Students per School(2009)

Central Anatolia has the highest number of Schools at 9,725 followed by Eastern Anatolia with 9,528 schools
and Black Sea with 9,076 schools. Istanbul has lowest number of Schools at 4,802 Schools whereas Istanbul has
the highest number of Students of 2.6 million students, hence Istanbul has the highest number of Students per
school of 544 and the National average of all schools across Turkey is 232 Students per School. This implies
that Istanbul has more number of students per school than the other regions, which means that the schools
are burdened.


3.5.3 Regional Gap Analysis – Number of Schools

Chart 21: Gap Analysis - Number of Schools (2009)
Source: Turkstat
18,000
4,710 6,683
16,000 4,667
4,028
14,000 2,991
2,991
12,000
10,000 1,097 1,251

15,537
14,435

14,195
8,000
13,104
1,656
11,430

6,000

9,725

9,528

9,349
9,076

8,854
8,672
8,439

8,098
7,575

6,458
4,802
4,000
2,000
-

Number of Schools Required Number of Schools

Considering the average number of students per school (refer to chart 20), the total number of schools
required in each region to accommodate all the eligible population (refer to chart 19) in those regions are
stated above in the chart.

This implies that the highest gap in number of schools, in Southeastern, Central and Eastern Anatolia Regions.

3.5.4 Regional Analysis – Affordability vs. Gap

Chart 22: Gap Analysis - Per Capita Income to Gap in Schools
Source: Turkstat, IMF

12,000 9,740 10,109 10,216
10,000 7,551 8,276
7,343
8,000 5,369
6,000 4,376
2,991

4,028

4,710

4,667

1,097

1,656

1,251

6,683

4,000
2,000
-

*Per Capita Estimates based on previous
years.
2009 Gap In Schools 2009 Nominal GDP per capita in US $


When comparing the gap in schools to GDP per capita of the regions, it shows the affordability of the region to
fulfill the gap. Istanbul has the highest GDP per capita income of US$ 10,216 and also it has a significant gap in
number of schools. Aegean and Marmara also have a high GDP Per Capita and a Significant Gap, whereas
Southeastern Anatolia has high gap but low GDP Per Capita.

3.6 Gap Analysis- Quality & Occupancy

3.6.1 Students School Ratio:

Average Number of Students per School determines the standard of infrastructure of Schools in the region.
While most of the region have the students to school ratio around the overall average of 232, Istnabul has a
very high students to school ratio of 544. This implies that the school infrastructure in Istanbul is burdened,
catering to over 2.6 million population with just around 4,802 schools.

Chart 22: Average Number of Students per School(2009)
Source: Turkstat
600 544
500
400
300 226 248 247 231
207
200 155 154

100
-

Average Number of Students per School(2009)


3.6.2 Students Teacher Ratio:

The Students Teacher Ratio gives an indication of the quality of education of a school. The overall average
number of students to teachers in Turkey was around 23 in 2009. Istanbul and Southeastern Anatolia had a
very high Student to Teacher ratio of 29 and 30 respectivley. This implies that the quality of education in these
regions have been compromised and there is need to increase the school infrastructure and bring in more
human resources to fulfill the gap qualitatively.

Chart 23: Student Teacher Ratio (2009)
Source: Turkstat 30
140,000 29 35
120,000 25 30
21 22
100,000 19 18 19 25
80,000 20
60,000 15
91,160

76,751

59,489

88,527

91,409

91,135

66,991
40,000 114,296 10
20,000 5
- 0

Number of Teachers Students to Teacher Ratio

3.6.3 The Estimated Gap in School

As per above analysis, it indicates that Istanbul though does not show a huge gap in number of school, the
schoos in Istanbul are low on quality of education when compared to other regions. The School Infrastructure
in Istanbul is also burdenedwith more number of students per school. Hence to analyse the actual gap in
number of Schools the same quality benchmark which is across Turkey, needs to be considered.

Chart 24: Gap Analysis - Number of Schools (2009) National Benchmark
Source: Turkstat
18,000 10,354 6,601
16,000 4,326
14,000
12,000 1,751 (124) 1,691 1,876
(297)
10,000
15,455
15,156
14,051

8,000
10,190

9,974

6,000
9,725

9,528
9,404

9,266
9,076

8,854
8,779
8,439

8,098
7,575

4,802

4,000
2,000
-

Gap Number of Schools Required Number of Schools


Considering the last three years average number of students per school of all schools across Turkey (as in chart
17) of 232, we can estimate the gap in number of schools in each region. If all the eligible population were to
be accommodated at the rate of national benchmark (chart 17) then each region will require the above stated
number of schools. Requirement for new primary schools was highest in Istanbul at around 8,000 schools.

The assumption considered in the above analysis is that in future all regions will have standard students to
school ratio.

The average number of students per school is not similar across regions (chart 20), hence some regions such as
Eastern Anatolia and Black sea (which have the students to school ratio less then national benchmark of 232),
show negative gap. Regions such as Istanbul which had the highest student to school ratio of 544 show the
highest gap.

3.6.4 Regional Analysis – Affordability vs. Gap

Chart 25: Gap Analysis - Per Capita Income to Gap in Schools
Source: Turkstat
16,000 13,217 13,326
14,000 11,594
12,000 10,176 10,042
8,897
10,000
8,000 5,873
10,354

6,000 3,614

6,601
4,000
1,751

4,326

1,876
(297)

1,691
(124)

2,000
-
(2,000)

Gap In Schools GDP per capita in US $

When comparing the gap in schools to GDP per capita of the regions, it shows the affordability of the region to
fulfill the gap. Istanbul has the highest GDP Per Capita Income of US$ 13,326 and also it has the highest gap in
number of schools of over 10,000. This implies that Istanbul can sustain the demand for a high quality private
education and should be the most likely target for investments in quality private schooling.


3.7 Sectoral Analysis

3.7.1 Sector wise Breakdown – Number of Schools

Chart 26: Number of School- Sectorwise Breakdown
Source: Turkstat

The share of Private sector is around mere 4% , There is a vast opportunity
for Private sector to expand its share.

45,000 41,116 40,775 40,727
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000 1,474 1,598 1,717
-
2007 2008 2009

Public Private

*Note: the above figures do not include Pre – Primary Schools.

Turkish education system gives private sector equal opportunity; however as evident it is highly dependent on
Public sector as it is free; however private schools have an enormous opportunity to expand.

There is a vast difference in number of schools in private and public sector. There were over 40,727 public
schools across all classes as compared to around 1,717 schools in private sectors. The Private schools have
risen steadily at an average rate of around 8% for last 3 years.


3.7.2 Sector wise Breakdown- Number of Students

Chart 27:Number of Students - Sectorwise Breakdown
Source: Turkstat
16.00
13.93 13.80 14.19
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.30 0.32 0.35
0.00
2007 2008 2009

Public (Millions) Private (Millions)

*Note: the above figures do not include Pre – Primary Schools Students

There are currently over 14.1 Million students in Public Schools while a marginal 0.35 million are in private.
There is a great demand to increase the school infrastructure further and demand for quality private education
is only set to increase.


3.8 Higher Education Statistics

3.8.1. Eligible Population

The population eligible for Higher Education in the age brackets of 20 – 23 years was around 5.02 million in
2009.

Table 7: Eligible Population for Higher Education ( Millions)
Higher Education ( 20-23)
2007 4.99
2008 5.01
2009 5.02

3.8.2 Higher Education Brief

Since the passage of the Higher Education Law (No. 2547), the administration of higher education in Turkey
was comprehensively restructured and centralized. All higher education institutions were tied to the Council of
Higher Education (YÖK, COHE). COHE is a fully autonomous national board of governors and sets Turkish higher
education policies and strategies.

Until 1984, there were no private universities in Turkey. Higher Education Law allowed non-profit foundations
to establish universities that must be accredited periodically. The law requires all the private institutions,
governed by individual boards of trustees and completely autonomous in financial and administrative matters
(including setting tuition fees and salary scales and appointing rectors and deans), to comply with the
academic requirements set forth by the Council of Higher Education.

Student admissions are to be through the central admissions system, based on a competitive student selection
and placement examination, and the requirement that at least 10 percent of students must be admitted on
scholarships provided by the institutions themselves. Private universities are eligible for state funding for up to
half of per student funding at state universities. However, to qualify for such state aid, private institutions
must demonstrate performance at par with state universities. The Council of Higher Education closely
monitors the situation by measuring the numbers of students and publications per full-time faculty.

In terms of both the number of institutions and the share of total enrollments, private higher education in
Turkey falls way below the numbers commonly encountered in the Asia-Pacific rim, and Central and Eastern
Europe. Yet, the growth of private higher education in Turkey has been smooth.

Currently as per Council of Higher Education, As of October 2009, there are 137 universities out of which 92
universities were Public Universities and 45 Private nonprofit universities. Apart from these 137 universities
there were two higher institutes of technology and five private post-secondary vocational schools that are not
attached with any university. There are estimated 2.9 million students currently studying across all the 137
universities including technical, vocational and open study courses.

Table 8: Number of Universities
Universities in 2009
Public Universities 92
Private (Non Profit) 45


3.8.3 Higher Education – Number of Students Growth Rate

Chart 28: Number of Students Growth Rate
Source: Council of Higher Education, University of KOC- Report, Turkey- UK Seminar

3.50 16.41% 18.00%
15.28%
3.00 13.05% 16.00%
14.00%
2.50 12.00%
2.00 10.00%
1.50 8.00%
1.00 6.00%
2.22

2.98
2.56
4.00%
0.50 2.00%
0.00 0.00%
2007 2008 2009

Number of Students ( milions) Growth Rate (%)

The total number of students in all the 137 universities for all the programs i.e. undergraduate, vocational and
all the open courses was around 2.9 million (estimated as per 2007 numbers) in 2009. The number of students
increased, by over 15% over 2008.

3.8.4 Higher Education Analysis – Eligible Population

Chart 29: Higher Education Analysis- Eligible Population

6.00 2.04
4.99 2.45 5.01 5.02
5.00 2.77

4.00
2.98
3.00 2.56
2.22
2.00
1.00
0.00
2007 2008 2009
Gap Number of Students ( milions) Eligible for Education (20-23)( millions)
(Millions)

The total Eligible population in the age group of 20 -23 was around 5.02 millions in 2009 whereas all the higher
education institutions accommodated only around 2.9 million students for the year 2009.


Turkey Country & Education Sector Report

Turkey Country & Education Sector Report

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