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TEPAV Economic Policy Analyst Çağlar: “A Jump is Needed and Industrial Policy is the Answer” Delivering a speech in the annual conference of Euro-Mediterranean Forum of Economics Institutes (FEMISE) Çağlar emphasized that Turkey faces the risk of "middle income trap" and that the answer to the needed Jump is a new industrial policy.
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24/11/2010 - Viewed 1765 times

ROME - TEPAV Economic Policy Analyst Esen Çağlar emphasized that Turkey is stuck in between two 'worlds' and needs the new industrial policy.  Evaluating Turkey's industry Çağlar stated that it is challenging for Turkey to converge to US and EU income and also to compete with low-cost East Asian producers. Çağlar maintained that Turkey faces the risk of "middle income trap" that the answer to the needed Jump is a new industrial policy.

Attending the annual conference of Euro-Mediterranean Forum of Economics Institutes (FEMISE) on 23-24 November in Rome, Çağlar delivered a speech about Turkey in the session where industrial policy experiences of developed and developing countries were exchanged. The session was moderated by Samir Makdisi, Former Minister of Economy of Lebanon and the other speakers were Khalid Sekkat, from Université Libre de Bruxelles in Belgium and Suk Joon Kim, President of South Korea Science and Technology Policy Institute.

Origin of transformation was not industrial policy

Summarizing Turkey's transformation story, Çağlar said that the transformation is happening and changing the Turkish society more than ever before. Çağlar remarked that this transformation is not taking its source from a coherent industrial policy. In this context Çağlar addressed the outcome of the interplay of several factors including geographical location, EU Customs Union and the ongoing accession process as well as structural factors like the entrepreneurship potential and external factors among which are global economic and technological trends and rising foreign direct investment flows.

Touching upon the "empty side of glass" which he defined as the challenges facing Turkey's industry, Çağlar pointed the lack of a coherent growth story. Çağlar also stated that Turkey must tackle with SME growth problem via productivity and innovation and fight with skills mismatch problem in the labor market and unemployment.

Suggesting on how Turkey can take a step in the industrial policy issue generally, Çağlar draw attention again to a coherent growth story that would tackle the binding constraints with ambitious reforms. Çağlar also said that industrial policy must be dealt with as the part of the growth strategy and stressed the importance of focusing on governance process.

 

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