You cannot develop breathtaking innovations if the legislation on intellectual property rights is not accompanied by a functional court system

I heard this the other day. Garaj, the incubation center of the TOBB University of Economics and Technology, holds TechTalkThursday events, hosting a leading entrepreneur. Last Thursday’s guest was Numan Numan, venture capitalist and entrepreneur. He said this when he was telling about how he had opened his venture capital (VC) fund. He said: “One of the investors I visited when I was trying to raise funds for the VC said, ‘I am putting up a plaza over there; returns guaranteed. Why would I bother investing in your VC fund?’" I found this hilarious, and noted it down.

Please honestly tell me what you would do. Say, you discovered an empty parcel of land convenient for a project, and convinced the municipality and ministry to increase the square footage allowance. You would immediately develop a project under favorable zoning options, securing high returns. You would not take the risk and found a VC fund instead. Right? “The project sure seems all right. But why don’t I support 500 young entrepreneurs instead? If one or two succeed, I can even make some money.” You wouldn’t say that, would you? To be honest, I wouldn’t.

In fact, there is nothing peculiar to Turkey up to this point. The construction of the National Theatre in Budapest, Hungary, took nearly twenty years to complete, I was told the other day. Here is the story: the city administration set aside large parcel of land for a theatre at the city center. They complete the zoning regulations for the land. Then comes an investor and offers some money for the land on which he wants to build a plaza. The administration accepts the offer and changes the zoning regulation via a cabinet decree. The plaza is built on the land immediately and the National Theatre is recently completed. Then, there is nothing peculiar in Turkey with this respect.

What is peculiar is that, Turkey never before has attempted this much for entrepreneurship, innovation, and industry-university partnership projects. Never before it has transferred this amount of funds to the field. If you do not set the temperature perfectly, however, the investment climate does not deliver the expected outcomes no matter how hard you try. You cannot channel funds towards entrepreneurs if unearned rents on land are not taxed, land investments guarantee huge returns, and zoning and floor area regulations are made recklessly. Neither can you develop breathtaking innovations if the legislation on intellectual property rights is not accompanied by a functional court system. The patent law has not been enacted yet. According to the draft law, the respective university will be able to benefit from the inventions made in its laboratories. Better than nothing. Still, people will not make any inventions until the functionality of the relevant court system is ensured.

So, is there no reason for hope in Turkey? Not at all. Last week I chatted with the representatives of a seed company founded by a prominent construction company. It was one of the most pleasant parts of the week. I already knew those who had switched from other sectors to construction. It is good to know that some people in Turkey have the vision to switch from construction to biotechnology.

There is no point in trying to develop a domestic automobile brand in Turkey. That era has ended and we have been left behind. There is no point in concentrating on consumer electronics, either. That was the paradigm in the 1990s. Turkey was asleep then. When it finally woke up it noticed South Korea and China and lamented its fate. But biotechnology can still make sense, if the ecosystem is considered in its entirety. I will get back to this sometime.

This commentary was published in Radikal daily on 16.04.2013