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    Why does Turkey not have any star sectors?

    Güven Sak, PhD28 September 2010 - Okunma Sayısı: 1107

    I recently heard that star sectors of Taiwan have been changing. While the ICT sectors used to be more important, these were recently replaced with solar energy sectors. Hearing this, what question comes to your mind? Do not you think "What are Turkey's star sectors, then?" After all, we cannot just sit down and wait while some try to specify the new normal for themselves. At least, we should not. But I took a deeper look at this issue and I want to advice you not to deal with comparisons. The reason for this is quite simple: Turkey does not have star sectors that fit into the definition.  And this is the exact issue we must be worried about. Then, why Turkey does not have a star sector? It is certainly impossible to answer this question completely with one short commentary. But well begun is half done. So let us begin today.

    What is this star sector(s) issue? It is about having sectors which has a weight in world trade and which rapidly solidifies its weight. It is of great importance to have a sector or sectors that has high competitiveness in the global economy. This is exactly what star sector refers to. In the era of globalization, your performance, competitiveness and export potential in the global economy is of significance. I assume that the lesson to be learned for Turkey is clear. In global scale, Turkey does not have a highly competitive sector. And this is quite bad.

    This point is reflected also by the below figure for the year 2009. Each bubble shows the size of total exports of each sector in Turkey. This makes it possible to identify the sectors with higher volume of exports. The horizontal axis shows the global market share of the relevant sector. As it implies, the share of the greatest sector of Turkey has a 4 percent share in the global market, at most. And the average market share is around 1.5 percent. The vertical axis gives the annual average growth rate of the relevant sector between 2005 and 2009. Over the said period, sectors like Electrical Machinery grew with a pace of 20% annually while Telecom and sound equipments sector (TV) contracted by almost 10 percent in terms of export performance. The sectors that are located at the right-upper edge of the figure, i.e. sectors which enjoy both high annual average rise in exports and high global market share, correspond to star sectors. The outlook is clear: the said spot is empty. Turkey does not have any star sector.

    But let me underline that this is not specific for the year 2009. The outcome would be the same for 2004, either. TEPAV's economists first introduced this figure and the analysis in 2004. The agenda back then was industrial policy. The said analysis was also given in the State Planning Organization Industrial Policy Ad-hoc Committee documents. The documents said: Turkey needs a strong industrial strategy and infrastructure reforms in order to raise star sectors out of rising sectors. The year is 2010 now. And the demand is still the same.

    At the heart of the lack of export sectors with high competitiveness in Turkey lies the inability to form a solid industrial policy framework in the past. Here, industrial policy does not imply state's selective support to certain sectors. The issue at question is the construction by the state of the institutional and physical infrastructure that will improve the competitiveness of sectors. In this context, the perspective reflected in the recent Turkey report of the OECD is quite correct. Competitiveness in exports is evidently related with exchange rate. Nonetheless, the issue is not solely associated with exchange rate.

    Figure 1. Competitiveness of Turkey's Sectors, 2009

    referans20100928.520px

    I know that the figure above tells a number of other lessons. But I do not have the space now.  The outlook of TV manufacturing as of 2010 is as expected. Reference archives also tell it. The cost of public policy mistakes is definitely paid.

    You can count no man happy till he dies. Turkey is currently squeezed between China and Europe. Let me elaborate on this soon.

     

    This commentary was published in Referans daily on 28.09.2010

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