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    Turkey’s Confusion with the Digital World

    30 July 2013 - Okunma Sayısı: 3017

    We live in a world of contradictions.  Each and every country has some of their own, and Turkey is no exception. One of the bizarre dualities it accommodates is about the digital world:  On one hand, Turkey appears to be embracing the blessings of technology at full steam.  As of February 2013, it had the 7th largest Facebook (membership) presence in the world with over 32 million users.  It ranked second only to the US for the largest number of check-in’s in Foursquare.  Its broadband penetration rate is around the OECD average, which, when you consider the fact that Turkey is usually an embarrassing outlier along with Mexico in OECD statistics, is quite impressive.  Yet it looks like Turkey is lagging behind when it comes to adopting some of the more critical assets of the digital revolution: Only 37% of Turkish women used the internet in the past 3 months compared to 58% of men.  Almost half of internet users (42%) in Turkey have never used the attachment (feature) while sending an e-mail, significantly higher than the European average of 22%. (Add this to the fact that Turkey has a far younger population than most European countries.) In terms of adopting digital technology, Turkish firms are not able to compete with their counterparts in developed countries as well as some emerging economies. Between the years 2007-2009, only 14% of Turkish firms’ registered patents were in ICT-related fields. The OECD average is 34%.  According to BCG, the internet economy’s share of GDP in Turkey is one of the lowest in the G-20, and it doesn’t seem to be changing anytime soon. (Figure 1.)

    Figure 1: Internet economy’s share in the GDP

    internet economy share gdp

    Source: BCG

     

    At the first look, the mix of contrasting evidence on Turkey’s adventure with the internet might leave us puzzled.  Yet I believe that this is not necessarily a contradiction, it is merely an analogy of the epidemic a lot of developing countries are prone to, including Turkey. This is what a country likely to enter the middle income trap looks like in the year 2012:   While a large proportion of the population is digitally connected and dynamic, technology adoption of businesses is not ready to take the economy “to the next level.”  In other words, a sizeable part of the population is wealthy enough to benefit from the wonders of technology, but it doesn’t have the know-how and/or the incentives to make use of it to become wealthier. This situation is driven by several dynamics: Education, both in terms of quality and average years of schooling is still a problematic issue in Turkey, so much that “we are too rich to be as illiterate as we are.”  Secondly, this level of advanced technology has never been more accessible in the history of humankind.  And thirdly, even though technology and innovation have already become the two favorite buzzwords of policymakers, they are not the favorite instruments of wealth creation in Turkey.

    The discourse in the transformation of Turkey’s industry sadly limits itself to over-used terms and goals that are already becoming irrelevant and out-dated.  Nonetheless, something much bigger is happening in the global manufacturing industry: The digital world is beginning to mesh into the industrial one, faster every day.   Computing, analytics and low-cost sensing are becoming more important tools for competitiveness of firms.  This new sort of production, called the industrial internet, is based on increasing the operational efficiency of machines through complex systems and a much more efficient use of resources.  If Turkey is to take part in this brave new world, digital adoption of firms and households should be carried to a more advanced, sophisticated level.

    For a sustainable and resilient progress in Turkey’s manufacturing industry, the firms need to go through the internet revolution as soon as possible.  The economy will be shaped by how the policymakers, firms and citizens handle this new digital age. In Turkey, there is still a huge amount of work to be done in terms of the legal framework for the internet economy, be it IPR for digital content, data protection, or e-commerce.  Digital literacy, both for households and firms, remains as an intact issue save for a very small number of non-governmental undertakings with limited impact. What needs to be done, in this context, is to accommodate the use of technology –and not only through internet penetration rates and mobile devices – for growth, innovation and creating value. Otherwise, Turkey will be home to many new strange asymmetries.  And they will keep on puzzling us for a long time to come.

     

    * Bilgi Aslankurt, Research Associate, Economic Studies

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