TEPAV Director Sak Warns Industrialists on Deindustrialization Güven Sak pointed at the ongoing process of deindustrialization in Turkey mainly because of the failure to advance quality in industry.
ISTANBUL - TEPAV Director Prof. Dr. Güven Sak delivered a presentation titled “Signs Unfolding: Ongoing Deindustrialization in Turkey” at the assembly meeting of the Istanbul Chamber of Commerce (ISO) on Wednesday, 26 December 2012. Stating that the signs of deindustrialization in Turkey were becoming more critical, Sak said, “The services sector can bring development, but you need to become like the US first. An advanced industrial sector is necessary in order to improve the quality of the services sector.”
He stressed that Turkey was in an ongoing process of deindustrialization, mainly because of the failure to advance quality in industry. Citing the ISO 1000 lists composed of the 1000 largest industrial companies, he underscored that exit from the manufacturing sector and entry to the services and energy sectors increased from the 2000-2006 to 2007-2010 periods. Emphasizing that the erosion of the manufacturing industry impeded investments that can advance the quality in the sector, Sak said:
“Some, citing the US example, argue that the services sector can bring development. Yes, development can come also via the services sector. But you need to become like the US first. Industry implies such a discipline that it also nurtures a generation that mastered in organization. You need advanced industry so as to improve the quality of the services sector.”
“The contribution of industry to growth was small”
Prof. Dr. Sak said that Turkey had a moderate growth performance, with small contributions by the industrial sector. He pointed out that Turkey was among the top in manufacturing industry output in 1990 and 2000 but it moved off the top 15 by 2010. He added:
“For the 2000-2010 period, the total growth in upper-middle income countries was 80 percent on average, one fifth of which came from the manufacturing industry. Turkey’s total growth over the same timeframe was 46 percent and the share of the manufacturing industry was around 10-15 percent.”
Sak expressed that the share of manufacturing companies in total bank loans decreased from 50 percent in 2000 to 20 percent.
“Turkey was unable to transform its industry”
Sak accentuated that in the global era enhancing quality was the key to protecting the market share of industry and to overcoming the middle income trap. He said, “Turkey’s problem is that it was unable to transform its industry. Without high-technology industrialization, goals for 2023 will remain a dream.” Stressing that tax and justice systems impeded the qualitative transformation of Turkey’s industry, Sak concluded:
“Deindustrialization will stick Turkey to the middle-income trap. Monetary incentives are required, but insufficient alone. Turkey needs smart incentives, like those for green growth. Also, the image of industry in the country must be redefined.”
