2016 World Development Report Presented At TEPAV We must try to understand the digitalization process: TEPAV Director Sak
Ankara – Trying to understand the process of digitalization is a must for Turkey, TEPAV Executive Director Güven Sak said at a meeting held at the Turkish think-tank’s headquarters in Ankara for the presentation of the World Bank’s 2016 World Development Report, with the attendance of Deputy Prime Minister Mehmet Şimşek and the World Bank’s Turkey Country Director Johannes Zutt.
In his opening speech, Sak said that Turkey’s economic performance over the last 14 years has rather been successful. Noting the expectations for national income to rise from 10,000 to 25,000 U.S. dollars, Sak stressed that achieving this goal would be no mean feat. “This is why we have to look for new ways. It is critical that we try to understand the digitalization process. Therefore, countries like us who are in a process of development must prepare for technological developments,” he said.
Digital economy will determine the destiny of the countries: TOBB chair
Rifat Hisarcıklıoğlu, Chairman of the Turkish Union of Chambers and Commodity Exchanges (TOBB), also highlighted that the main theme of the report was “digital economy”. “The extent to which we benefit from the digital economy will likely determine the destinies of the countries in the coming decades,” he said.
Stressing that it would now be impossible to think about life without internet, Hisarcıklıoğlu added “The internet economy is expected to grow 8 percent annually in the coming years in G20 countries alone. If the internet economy would make up the economy of a separate country, it would rank the fifth biggest in the world.”
Hisarcıklıoğlu also said that while bringing new opportunities, Internet is also drilling new gaps. “The most dangerous gap is for small and medium sized enterprises. Indeed, research shows that investments in innovation are the basis for their growth and this requires the effective use of digital technologies. Small and medium sized enterprises that are unable to use these technologies effectively will be left behind in the competition,” he said.
Hisarcıklıoğlu added that the Turkish business world also had expectations regarding the regulation of the internet. “The rules should play an enabling rather than a limiting role for the internet. Those rules should be simple and flexible enough to keep in pace with the fast development of technology, and should be established after taking the private sector’s opinion. Those rules should not impose on entrepreneurs the way they should run their business, but simply set a general framework. The rules should be made in a way to ensure compatibility with other countries,” he said.
Hisarcıklıoğlu also said that the Turkish Fund of Investment is a new generation model of initial assistance for innovative companies and the internet economy, adding “What we say is that ‘the bureaucrats shouldn’t be the ones to pick the company to receive assistance anymore.’ The public sector should use its resources to develop the internet ecosystem, while and venture capital should relay these funds within this ecosystem by choosing the right companies to assist. The venture capital holders should support those companies not only with financial resources but also with mentorship and networking.”
Stressing that digital economy has virtually caused a new revolution, Hisarcıklıoğlu said: “As always, those who anticipate trends in advance will be the winners of this process. With the Turkish Fund of Investment, we pave the way for the entrepreneurs of our country to be among those capable of forecasting in this revolution. However, no revolution is painless. Therefore, it can’t be expected that this huge transformation will come through without problems… Drafting and implementing the legal framework is of course the government’s duty. We, as the business world, are ready to assume our responsibilities. We are conscious that the digital economy will be developed in the world with the establishment of an environment of mutual trust based on the protection of personal data. As you know, the first step for the Law on the Protection of Personal Data in Turkey that we have been expecting for long has recently been taken. The draft law was discussed at the sub-commission and will pass from the Parliament as soon as possible. I am certain that this law will be a milestone for Turkish entrepreneurs to benefit more from the digital economy. As you see, the digital economy opens the doors to a world that we couldn’t have imagined until some 15 years ago. A world where access to information is much easier and one that brings remote places closer. Such a world is possible with the transformative force of the digital economy. And using this opportunity in the best way possible is in our hands.”
Turkey should become more foreseeable: Deputy PM
For his part, Mehmet Şimşek, Deputy Prime Minister in charge of economic affairs, stressed that investments are on the rise. “The volume of investment attracted in 2007 alone is more than the total of what Turkey had attracted in 22 years. This is partly linked with the global context, but it is not a coincidence. It has been possible by the improvement of the investment climate, the structural reforms, political stability and strong leadership. Today, we are on the verge of a similar situation,” he said.
Noting that many disabled people live in developing countries, Şimşek said that thanks to technological developments and digitalization, the disabled may contribute to the production of added value from their homes in a way that was unimaginable before.
Şimşek also stressed that there were strong links between the main issues pointed at by the World Development report 2016 and those raised by the G20 during Turkey’s presidency.
Noting that investments had considerably slowed down following the global financial crisis and many countries would fail to boost investments, Şimşek said this was a factor driving down growth rates across the world.
Arguing that Turkey should become a more foreseeable country and the investment climate should be improved as soon as possible, Şimşek said “While doing this, we also have to introduce the legal regulations required by the 4th industrial revolution. Having a dense regulatory environment is not helpful, there should be few but effective regulations. The private sector should be provided with considerable space and flexibility in almost every area so as not to obstruct the sector’s dynamism. Rules are needed in almost all areas. This is also true for the Constitution. But making minimum wage a constitutional issue is not reasonable or rational and there is no point in doing that. [Rules] should only establish the framework of freedoms, and define the responsibilities of the state to citizens and the responsibilities of citizens to other individuals and the state. What should be predominant is an approach that seeks to define freedoms in the broadest way possible and define the systematic framework clearly.”
‘Turkey faces difficulties to join high income countries’
World Bank’s Turkey Country Director Johannes Zutt, meanwhile, stressed Turkey’s shortcomings in improving its national income levels. “Turkey has rapidly become a middle income country. But it faces challenges in joining the ranks of high income countries,” he said.
During his speech for the presentation of World Bank’s “World Development Report 2016: Digital Dividends” and the signing ceremony for the establishment of a Turkish Fund of Investment, Zutt said that growth, employment and services were the most important returns for digital investments. “The report shows how countries can be more productive, people can enjoy better opportunities and governments can provide better public services thanks to digital technologies,” Zutt said.
Arguing that digital technologies will play an important role to diminish economic and social costs borne by companies, individuals and the public sector, Zutt said “While mobile phones and other digital technologies are fast spreading across the developing world, digital dividends such as higher growth, higher employment and better public services have remained below expectations. Some 60 percent of the world’s total population remain outside the digital economy. Although the number of internet users has tripled since 2005, four billion people still lack internet access. Despite many individual success stories, the impact of technology on global productivity, the increase of opportunities for the poor and the middle class, and the spread of accountable governance has remained below what was anticipated.
Report urges comprehensive strategies
World Banks’s “World Development Report 2016: Digital Dividends” presented at the meeting recommends two major sets of actions to make full use of the new digital era’s developmental pledge. The report urges to bridge the digital gap by making the internet universally accessible, affordable, open and secure, while strengthening regulations that ensure competition between enterprises. It also calls for accommodating employee capabilities with the demands of the new economy and ensuring the accountability of institutions.
The report notes that digital development strategies should be much more comprehensive than strategies on IT technologies, stressing the importance for countries to create a proper environment for technology in order to maximize benefits. The report also includes measures to improve the productivity of enterprises, making them more innovative, such as investing in basic infrastructure, reducing transaction costs, eliminating barriers to trade, facilitating the entry of new enterprises to the market, strengthening competition authorities and ensuring competition between digital platforms.
