Syria is among the top five trading partners of Kocaeli. It seems that the country's lack of an industrial strategy will be very costly.

Recently I visited Kocaeli, an industrialized province in northwestern Turkey. I attended a meeting organized by the Kocaeli Chamber of Commerce. During the lunch, a businessman from the Chamber Assembly said, "We have not received any orders from Syria since the New Year." He seemed to be concerned about the Arab Spring. I remember thinking, "How important can trade with Syria be for Kocaeli?" It appears that I was wrong. Syria is one of the top five trading partners of the province. I have to admit that this has confused me. It seems that the lack of an industrial strategy will be costly. Let me tell you why.

Have you been following the diversification in Turkey's exports in recent years? I am trying to follow the process closely. To be honest, I used to think that geographical proximity was one of the chief factors that determined the destination of export diversification. I thought that western provinces exported to the west and eastern provinces exported to the east. But now I believe that the dynamism of industrialists, or more correctly, their ability to solve their problems on their own, also needs to be added to the equation. Industrialists who face difficulties in accessing European markets due to the crisis in the region try to find solutions on their own. Turkey's exports increasingly move towards countries with poorer import baskets. We cannot expect Germany to have the same import demand basket as Uganda or Syria. And indeed, it does not. But in the end, it is Turkish industry that becomes poorer. Industrialists might think that the only way out is to sell the products in their inventories. They do not even consider seeking markets for high-tech goods that they might produce in the future. And in fact, they should not. Otherwise, they cannot finish or focus on the existing tasks.

Last week I wrote about the fundamental problem with populism. The situation was just like Stalin's comment about the Pope. Stalin, leader of the Soviet Union and the architect of the Cold War, was told, "The Pope is powerful. We had better build good relations with him." He responded, "The Pope! How many divisions has he got?" If you tell a populist, "We should not exploit the rights of unborn children," he responds, "How many votes will they bring in the next elections?" And he has a point, indeed.

Then, what would an industrialist say in response to the idea, "Why do you not seek demand for the high-tech goods you will produce in the future rather than the low-tech goods you currently produce?"  He or she will respond, "How will it help me make the payments due on Friday?" It is this simple. It is not the concern of the industrialists how Turkey will move from the medium- to high-income category. This is why statesmen are needed and useful.

I used to compare Bursa with Gaziantep to exemplify my point in trade patterns. Bursa is in the northwest of Anatolia, while Gaziantep is in the southeast. 78 percent of Bursa's exports head to the EU market, while the same destination for Gaziantep is only 24 percent. The main export market for the latter is the Middle East and North Africa, which receive 60 percent of the exports of the province. Bursa mainly trades with Europe while Gaziantep mainly trades with the Middle East. There was one conclusion I used to draw from this picture: Geographical proximity as well as the contraction of European markets has changed the export structure of Gaziantep in the last years. Export figures for Kocaeli, however, reveal another fact: as the markets contract, industrialists desperately are throwing themselves at the Middle East and North Africa markets. This is a good thing in one aspect since it proves that industrialists can find their way when the circumstances become difficult. In another aspect, however, this is bad since the goods basket required by the Middle Eastern and North African markets cannot promote the leap of Turkish industry to an upper section of the value chain. Starting to export to Syria is of importance considering market diversification, but it is not a source of pride concerning the sustainability of the industrialization process. So, let me draw two conclusions. First, the Arab Spring makes things difficult for Turkey. Second, Turkey definitely needs an industrial strategy.

This commentary was published in Radikal daily on 19.07.2011