Post-crisis Agenda for Foreign Trade: South-South Trade World Bank report "Managing Openness: Trade and Outward Oriented Growth after the Crisis" debated with a meeting at TEPAV.
ANKARA -A World Bank report titled "Managing Openness: Trade and Outward Oriented Growth after the Crisis" was addressed with a meeting held at TEPAV on September 19, 2011. Among the featured themes of the report was the rising importance of south-south trade, that is, trade between developing countries. TEPAV Director Güven Sak stressed the positive role of south-south trade in creating room for maneuvering and facilitating the sustainability of foreign trade. He also said that south-south trade did not always derive favorable outcomes and that it deprived Turkish economy of the demand that could advance the economy.
Delivering the opening speech, Sak stressed that the technology content of Turkey's exports had changed dramatically over the previous decade along with the Customs Union membership process. With the adverse developments in the European markets after the crisis, Turkey had diverted to new markets with lower-tech exports. He maintained that, if continued, this trend would have a negative influence on Turkey's export structure. According to the results of a recently completed research project jointly carried out with the Tigris Development Agency, Turkey's biggest rival in the Iraqi market was Iran. He said, "The structure of the demand in newly emerging markets does not match that in the markets we have lost. We are now meeting a lower-technology demand driven by basic needs." He added that though it had created a certain amount of room for maneuver, south-south trade would not generate positive outcomes for the advance of industrial activity in the medium term. Drawing attention to the impact of the Arab Spring and similar developments on the region's trade, he said, "It seems to me that we are in a period in which domestic demand will be of critical importance."
WB: "Protectionism was not as strong as we expected"
After Sak's speech, Mona Haddad, World Bank International Trade Department Manager and co-editor of a book with Ben Shepherd, delivered the keynote speech. Haddad stated that despite the fiscal crisis and trade collapse suffered at that time, openness had been preserved whereas it was now more important to manage openness for development. Foreign trade was the main channel that had spread the crisis, which had raised the expectations that countries would divert to protectionist measures. Haddad said that the mentioned measures which mainly targeted China remained at a limited level. She added that the Global Trade Alert project had identified over 300 "murky" protectionist measures. She said, "We observe that in no country export-oriented growth strategy was replaced with domestic-demand driven growth strategy."
Haddad stressed that in the medium term, we were likely to see the emergence of a new export-led growth strategy model (export -led growth strategy v2.0), in which south-south trade played a much greater role. Talking about such potential, she stressed that further liberalization of south-south trade could be considered.
Making assessments about Turkey, Marina Wes, the World Bank Turkey Head Economist, maintained that Turkey had made an impressive rebound after the global financial crisis with remarkable economic growth whereas the rising current account deficit increasingly financed by short-term fund inflows was a significant vulnerability. Stressing that the Bank believed that Turkey's need for foreign finance was concentrated in structural measures, she said that there were steps to take in the fields of energy efficiency, raising domestic savings and export competitiveness. She added that the World Bank would soon share a study on this issue with the public.
Sayan: "Export diversification must continue"
In his speech, TEPAV Entrepreneurship Institute Director Prof. Serdar Sayan first touched upon the opening of the Turkish economy. He stated that Turkey had demonstrated an impressive performance in overcoming the severe recession witnessed along with the crisis. Stressing that Turkey had regained the pre-crisis income level by the second quarter of 2010, he maintained that the locomotive of growth was different from that in previous periods. Exports had not rebalanced yet and that growth was based on domestic demand. Also emphasizing the importance of the fact that Turkey had faced the crisis in a period in which exports had been diversified to a high extent, Sayan drew attention to the province-based challenges and to the importance of continuing product and export market diversification.
The meeting was closed after a question-answer session.