Turkey’s export statistics signal low-growth in the medium-term. The resource constraints indicate that the solution will not be easy.

Turkey has to decide on its future plans immediately. Two days ago, Elisha Yanay, Chairman of the Israel Association of Electronics and Information Technology Industries, said that the number of basic sciences graduates remained the same while demand for them increased, which was the biggest constraint to the growth rate of high-tech sectors. TEPAV economist Ozan Acar’s policy note stressed that the brightest students no longer preferred the basic sciences. When it comes to the basic sciences, we are faced with problems in quality as well as in quantity. If Turkey is to achieve the 2023 targets, the production and export infrastructure need to be revised thoroughly. But whenever someone raises this idea, people keep asking how. So let me tell you how.

Let’s start with the 2023 targets. When the prime minister first raised the 2023 targets during an address, I was delighted. It is good that Turkey sets itself goals as companies do. It helps us concentrate our energy. This entire story on setting targets is just good; but lately we have started to go on a binge, as is usual in the Middle East. We had just focused on 2023 when the prime minister raised 2071 targets. I’m thinking that we are moving out off seriousness here. Let me put a stop here and switch to the steps Turkey should take concerning the production and export infrastructure.

TEPAV economist Ekrem Cunedioğlu wrote a note that addresses Turkey’s export performance from this very perspective. As the note suggests, Turkey cannot reach its targets by 2023 with the current production infrastructure and export performance. What does this mean? It means that Turkey cannot achieve the growth rates necessary to reach the 2023 targets under the current export performance. What should be done? The production and export infrastructures should be changed. But how? There are two types of countries in the world: those that can produce unique products or products that are produced only by a few others, and those that can produce only ordinary products that can be produced by each and every other country. Those in the first group (or the first league) grow at higher rates while those in the second league grow at lower rates. Up to recently, Turkey was converging to the first league. Since 2007, however, Turkey has been producing less sophisticated ordinary goods. The European crisis has made Turkey’s production unsophisticated. And a country with an unsophisticated goods basket cannot make a leap. What to do, then?

If the domestic demand and the foreign demand you are connected to don’t support your unique production scheme, there are two options you can follow: you can either find a destination that demands sophisticated goods or create domestic demand for a new area. The first option requires too much work involving connectivity, starting with logistics connections to new destinations. The second one, on the other hand, requires an incentive policy focused on selected sectors. For instance, it could be useful to bolster the production and export infrastructure in pharmaceutics and renewable energy-driven machinery sectors. Until today, we have thought about how to decide on the sectors to support. So, here is a method for you: channel state support towards sectors that will produce more sophisticated goods. That is, open a new chemicals laboratory instead of opening a new flour factory. Give support to the former, not the latter.

Will the task be done when we take such steps and create a higher-tech sector more unique to Turkey? Can Turkey achieve the 2023 targets easily, then? No, but at that point we can start talking like our Israeli counterparts. Higher-technology sectors will require a labor force with higher skills and qualifications; a higher number of graduates from the basic sciences. Then, we will have to face a new resource constraint. Until today, we have confined basic sciences graduates to teaching and living on low incomes. Because of this, the smartest and brightest young people in Turkey no longer prefer studying the basic sciences. They don’t even want to be engineers, as I stressed the other day. They prefer career options in the services sector instead.

Is there anything to blame on the Turkish youth? No, there isn’t. Is the current government to blame? No, unless we lose further time. As the saying goes, the mistakes of yesterday are paid for today. Turkey’s export statistics signal low-growth in the medium-term. The resource constraints indicate that the solution will not be easy.

This commentary was published in Radikal daily on 09.10.2012