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Turkey’s Industry: Carry on with the Pipes and Drums or Time for the Symphony? The recent transformation of and the prospects for the Turkish industry was deliberated during a meeting at TEPAV.
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10/05/2013 - Viewed 2190 times

 

ANKARA - TEPAV and the World Bank jointly organized a meeting titled “Industrial Policy in the World and in Turkey” on Friday, 10 May 2013. At the meeting, which raised the need for Turkey to switch to high-tech sophisticated industrial production, World Bank Turkey Director Martin Raiser proposed a “symphonic” policy framework for TEPAV analyst Esen Çağlar’s “pipes and drums” analogy. Raiser said, “One of the pieces of classical music that I like very much is Schubert’s uncompleted symphony. It is waiting for completion. Maybe Turkey can complete the symphony and have industrial policy as a classic symphony.”

The meeting started with the opening remarks of TEPAV Director Güven Sak. Addressing the industrial transformation between 1995 and 2010 in Turkey, Iran, and Russia, Sak stated that Turkey had surpassed the latter two in product sophistication. He also assessed the level and distribution women’s employment.

The panel session, moderated by Bozkurt Aran, Director of the TEPAV Center for Multilateral Trade Studies, hosted Umut Gür, Turkey Ministry of Development Head of Industry Department; Esen Çağlar, TEPAV Economic Policy Analyst; Danny Leipziger, Managing Director of the Growth Dialogue; and Jan Svejnar, Professor of International and Public Affairs at Columbia University.

“10th Development Plan to be Submitted to the Parliament”

Umut Gür of the Ministry of Development gave brief information about the 10th Development Plan, which will be submitted soon to the Parliament for discussion. Emphasizing Turkey’s dependency on intermediate goods, he said that they were trying to call the attention of the private sector to this area so that some proportion could be produced domestically. Concerning the $500 billion export goal for 2023, Gür said, “This was a target set by the private sector, not by the public sector. There is some puzzle. In some respects, the private sector is pushing the government and in others the government is pushing the private side.” Questioning if the current pace of development was sufficient, he gave information about the share of R&D in the GDP, the technology content of the manufacturing industry, and progress in branding and intellectual property rights. He stressed that the main challenge for both Turkey and the world was about how to manage diversification and the coordination between different institutions.

“Turkey is an odd country”

TEPAV Economic Policy Analyst Esen Çağlar stressed that Turkey was the 6th most rapidly urbanizing country in the world, but not in the top five in terms of human development. Angola, Algeria, Saudi Arabia, South Korea and Malaysia, the top five of the world in urbanization, were mostly ahead of Turkey in terms of education and high-tech exports. Stating that this outlook showed that Turkey was an odd country, he presented three options for Turkey: increasing competitiveness and selling more of the same goods to the same markets, entering new markets, or producing new products.

He continued: “Turkey has significantly improved its product basket. When we look at the last decade, however, we see an interesting story. In terms of entering high-growth markets we have been successful. But in terms of transforming the product basket, that is, entering into new products, we have not been that successful. For example, Korea has been able to enter both the high growth market and high growth products.” He stated that the joint report by the Ministry of Development and TEPAV in the context of the preliminary works for the 10th Development Plan addressed the steps needed to transform the product basket. The report identified as new vertical themes urban renewal and smart systems, green economy and green industry, SME internationalization, and inclusive industry for women.

Esen Çağlar, with reference to the sophistication of Turkey’s industry, stated that the current unsystematic organization resembled the unharmonious tunes of “pipes and drums” and stressed that Turkey needed to play a different kind of music with all instruments in harmony.

“The workforce needed to benefit from the demographic advantage”

Following the presentations, Danny Leipziger, the Managing Director of the Growth Dialogue, and Jan Svejnar, Professor of International and Public Affairs at Columbia University, made assessments on Turkey’s industry and the 10th Development Plan. Leipziger, stressing the importance of demographics for industrial development, said:

“People generally mistake the demographic dividend as a natural benefit. Demographic dividend can give you advantages provided that people stay in the work force. The retirement age in Turkey is much too low. Second, Turkey has to increase female labor force participation. Third, people in the workforce must have skills and not be involved in low productivity jobs. Productivity in Turkey is half of what it is in Germany in industry and services and less so in agriculture.”

World Bank: “Watch savings rates”

The meeting continued with concluding remarks by World Bank Turkey Director Martin Raiser. He said that when designing the development process, countries had to consider what country they wanted to be in twenty years, and he pointed at Turkey’s savings constraint. He identified Turkey’s latest work concerning industrial policy as an uncompleted symphony, referring to Schubert's symphony of the same name. He said, “Maybe Turkey will complete the symphony and have an industrial policy as a Turkish symphony.”

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