Download 1980-1990 - TOBB AB Dairesi

tepav
economic policy research foundation of turkey
Turkey’s Economic
Transformation and the Role of
Organized Industrial Zones
Istanbul, 19 October 2009
Economic transformation in Turkey
Agenda
 Introduction to TEPAV
 Economic policies and economic performance
 1980-now
 Snapshots from Turkey’s transformation
 Structural transformation
 Emerging and star sectors
 Regional transformation?
 Emerging regions
 Role of Organized Industrial Zones
 Some food for thought
Economic transformation in Turkey
Economic Policy Research
Foundation of Turkey (TEPAV)
 Established in 2004, with the support of the
Union of Chambers and Commodity
Exchanges of Turkey (TOBB)
 Independent, non-partisan think tank in
Ankara
 Focuses on economic policy,
competitiveness, governance and stability.
www.tepav.org.tr
Economic transformation in Turkey
TEPAV’s interdisciplinary approach
 Three major disciplinies:
 Economic policy
 Governance
 Foreign policy
 Cross-cutting themes: Governance
 Competitiveness
Studies
Economic
Studies
 Regional integration
 EU accession process
 Modus operandi:
 Think-tank activities
 Projects
Foreign Policy
Studies
Economic transformation in Turkey
A sample of TEPAV’s activities
 Developing policy tools for dialogue with the
government
 Investment Climate Assessment (with the World Bank and Treasury)
 Industrial Policy Document (with State Planning Organization)





Secretariat of the Competitiveness Council of Turkey
Industrial Policy Design Project, 2008 (for M of Industry & Trade)
Competition Environment Assessment (with the World Bank and FIAS)
Higher Education Sector Project (with the World Bank)
Regulatory Impact Assessment Projects (EU-funded)
 Governance of economic development
 Decentralization studies, regional development framework (with
The Ministry of Internal Affairs and local authorities)
 Fiscal monitoring and transparency
Economic transformation in Turkey
TEPAV’s regional integration activities
 Permanent dialogue mechanisms
 Business association networks
 Ankara Forum (Palestinian, Israeli and Turkish)
 Istanbul forum (Afghan, Pakistani and Turkish)
 Private sector development projects
 Tarqumia and Erez Industrial Estates in Palestine
 Joint industrial area in Syrian-Turkish border
 Trade facilitation in Central Asia – Silk Road
 Tourism cluster development (Armenia, Azerbaijan, Turkey)
 Capacity building projects
 Palestinian chambers, SMEs, industrial estates, customs
 Pakistani Competition Authority
 Ministries of Finance project-IMF Institute
 Various EU-related projects and activities
Economic transformation in Turkey
 Economic Overview
Economic transformation in Turkey
Economic liberalization and export led
growth strategy
1980-1990
 Turkey’s economic policy framework and reform
agenda were based on economic liberalization
during 1980s
 24 January 1980 Measures
•
•
•
•
•
Reforms to ensure proper functioning of market mechanism
Trade liberalization
Fiscal liberalization
Abolishing all sorts of subsidies except export subsidies
Decreasing state’s share in total economic activity
 Financial liberalization in 1989
Economic transformation in Turkey
Some economic indicators
GDP per capita (PPP)
Exports (million USD)
Imports (million USD)
Inflation
FDI (million USD)
Domestic debt / GDP
1980
2,981
2,910
7,513
45%
18
45%
2001
1990
5,933
12,959
22,407
60%
684
14%
2006
Average annual growth rates
1980-1990
GDP (in reel terms, YTL)
5.21%
GDP per capita (PPP)
7.12%
Exports (million USD)
16.11%
Imports
11.55%
1990-2001
2001-2006
Source : TURKSTAT, Central Bank, Treasury
Economic transformation in Turkey
A period of economic crises
1990-2001
 Macroeconomic and political instability
 High public sector debt
 High budget deficits
 High and chronic inflation
 High interest rates
 Excessive boom-bust cycles
Economic transformation in Turkey
Some economic indicators
GDP per capita (PPP)
Exports (million USD)
Imports
Inflation
FDI (million USD)
Domestic debt / GDP
1980
2,981
2,910
7,513
45%
18
45%
2001
8,021
34,373
38,103
69%
3,352
69%
1990
5,933
12,959
22,407
60%
684
14%
2006
Average annual growth rates
1980-1990
1990-2001
GDP (in reel terms, YTL)
5.21%
2.52%
GDP per capita (PPP)
7.12%
2.78%
Exports (million USD)
16.11%
9.27%
Imports
11.55%
4.94%
2001-2006
Source : TURKSTAT, Central Bank, Treasury
Economic transformation in Turkey
A new era after 2001 crisis
 A new economic program:
 Strong macroeconomic policy framework
 Structural reforms
 Independent central bank
 Banking sector reform
 Floating exchange rate regime
 A better investment climate
 Successful implementation of the economic
program and the EU accession process triggered a
deep structural transformation
Economic transformation in Turkey
INDUSTRIAL POLICY VISION
Becoming a production and services hub for medium
and high tech industries
Strategic Targets
Creating strong
and innovative
firms
Raising the share of
medium and high
tech industries
Horizontal Industrial Policy Areas
Business environment
Technology and R&D
Foreign economic relations
Physical infrastructure
Human capital and skills
Environment
Access to finance
Regional development
Transforming the
traditional industries
towards a higher
value added
structure
Sector-specific industrial
policy areas
Initiatives to address the
binding constraints in every
sector and region
Strategies to strengthen
clusters
Implementation, Monitoring, Evaluation and Coordination Mechanism
Economic transformation in Turkey
Some economic indicators
GDP per capita (PPP)
Exports (million USD)
Imports
Inflation
FDI (million USD)
Domestic debt / GDP
1980
2,981
2,910
7,513
45%
18
45%
2001
8,021
34,373
38,103
69%
3,352
69%
1990
5,933
12,959
22,407
60%
684
14%
2006
12,067
91,912
132,088
9.70%
20,168
43.70%
Average annual growth rates
1980-1990
1990-2001
2001-2006
GDP (in reel terms, YTL)
5.21%
2.52%
7.20%
GDP per capita (PPP)
7.12%
2.78%
8.51%
Exports (million USD)
16.11%
9.27%
21.74%
Imports
11.55%
4.94%
28.23%
Source : TURKSTAT, Central Bank, Treasury
Economic transformation in Turkey
Turkey’s historical growth
performance
Average annual GDP growth rate for selected periods, 1970-2007, %
8
6.8
7
6
5
4
4
3.6
3.2
3
2
1
0
1970-2001
1980-2001
1990-2001
2002-2007
Economic transformation in Turkey
How does the crisis affect the
Turkish economy?
 Foreign credit channel
 Domestic credit channel
 Foreign trade channel
 Confidence channel
Economic transformation in Turkey
Crisis leads to contraction; let’s hope
for recovery in 2010 and beyond...
GDP growth rate (y-o-y, 1999-2009)
8
6
4
2
0
1970-2001
-2
-4
-6
-8
1980-2001
1990-2001
2002-2007
2008
2009
Economic transformation in Turkey
 Snapshots for Turkey’s transformation
Economic transformation in Turkey
Shrinking agriculture; expanding
industry and services
Shares of main economic activities in GDP, (%, 1968-2007)
70
60
Services
50
40
Industry
30
20
Agriculture
10
0
Economic transformation in Turkey
Transformation speeded up recently
Sectoral employment trends (2002=100, 2002-2007)
130
Services
120
Industry
110
Total
100
90
80
70
Agriculture
Economic transformation in Turkey
Shift from traditional to modern:
case of manufacturing industry
Average annual growth rates of manufacturing sub-sectors (2002-2007)
30%
25%
20%
15%
10%
5%
0%
-5%
Economic transformation in Turkey
Changing structure of exports &
changing opportunities and challenges
Technological structure of exports
Turkey
2000
High tech
China
2005
2000
2005
8,9%
6,8%
24,37%
35,04%
Medium tech
24,2%
35,4%
44,75%
33,09%
Low tech
52,7%
42,4%
20,86%
22,75%
Resource based
14,2%
15,5%
10,02%
9,13%
Analysis based on UNIDO Technological Classification of Goods
Source: UN COMTRADE
Economic transformation in Turkey
Shift from traditional to modern:
case of services
Number of retail stores and grocery stores (1998-2007)
24,000
Traditional stores
(groceries)
150,000
Organized
(right axis)
140,000
22,000
20,000
130,000
18,000
120,000
110,000
Traditional
(left axis)
100,000
16,000
14,000
90,000
12,000
80,000
10,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Organized retail stores
160,000
Economic transformation in Turkey
Rapid increase in FDI
Foreign direct investment flows, million USD
25000
19261
20000
19940
15586
15000
10000
5000
8967
8138
2855
939
0
1222
2005
Economic transformation in Turkey
The new incentive structure for firms
Old environment
Changing New enviornment
 Competitiveness
 need for cheap labor
 cost-based
 very limited research and
development
 limited marketing
 Competitiveness:
 need for qualified labor-force
 quality-based
 focus on research and
development
 marketing innovations
 Investment Climate:
 High Inflation
 Generous incentives,
subsidies
 Pegged Currency (95-01)
 Investment Climate:
 Low inflation
 Limited incentives
 Prudent banking sector
 Floating Currency (post 2001)
Economic transformation in Turkey
The new game: Integration into the
global economy
Turkey’s import and export volumes, 2001-2007, billion USD
400
350
Export
Import
300
132
250
107
200
86
73
150
63
100
50
47
31
36
41
52
2001
2002
69
98
117
140
170
202
0
2003
2004
2005
2006
2007
2008
Source: Central Bank of Turkey 2006
Economic transformation in Turkey
Competitiveness of Turkish Industries:
Promising but also challenging…
Size of the bubbles indicate export volume in 2006
Emerging
Sectors
80%
Star Sectors
Petroleum,
Petrol.Product
70%
2000-2006 annual growth rate of exports (CAGR)
(Av. 1.8 %)
60%
Othr.Transport
Equıpment
50%
Road Vehıcles
White Goods
Metals Manufactures,Nes
40%
Iron And Steel
Power Generatng.Machınes
30%
M ısc M anufctrd
Goods Nes
( Av. 35 %)
Vegetables And Fruıt
Non-Metal.Mıneral Manfct
Textıle Yarn,
Fabrıc,Etc.
20%
Clothıng And
Accessorıes
Telecomm.Sound Equıp Etc
10%
Snail Sectors
Traditional Sectors
0%
0%
1%
2%
3%
World market share in 2006
4%
5%
6%
Economic transformation in Turkey
Emerging and star sectors
Industry
Services
•
•
•
•
•
•
•
•
•
Construction – real estate
Energy
Telecommunication
Logistics
Media
Health care
Education – training
Retail
High-tech and ecommerce
•
•
•
•
Automotive
White goods
Electric/electronics
High quality apparels
/textile (fashionwear)
• Pharmaceuticals
• Organic agribusiness
• Construction materials –
cement
Economic transformation in Turkey
 Regional dimension of the transformation
process
 Role of Organized Industrial Zones
Economic transformation in Turkey
Post 1980s regional transformation
as a result of economic orientation
 Before 1980s:
 Import-substitution industrialization
 Major industrial centers: İstanbul, İzmir,
Adana, Bursa
• Peripepheries: Kocaeli, Manisa, Mersin, Eskişehir
 After 1980s:
 Export-oriented industrialziation
 New emerging industrial cities (Anatolian
tigers): Denizli, Gaziantep, Kayseri, Konya,
Ankara
Economic transformation in Turkey
Implications of regional transformation
 Industrial activities spreading to a variety of
regions
 Higher overall growth rates because of unsaturated
markets (unleashing the untapped potential)
 Fair income distribution across cities
 Emergence of a middle class
 Desire for political stability with strong economic roots
 Creation of new centers puts less pressure on big
cities (old centers of economic activity)
 Key challenge: management of the process
 Decentralization process; capacity of the state aparatus
to act local
Economic transformation in Turkey
How Turkey could trigger this
process?
 Political will since the 1980s..
 Macroeconomic conditions?
 Roller-coaster macro environment
 But generous incentives for producers...
 European Union accession framework
 Raising the capacity to act local; focus on
regional disparities
 Spread of Organized Industrial Zones (OIZs)
 Necessary but not sufficient condition
Economic transformation in Turkey
Turkey’s OIZ experience
 Main motive:
 Improving the investment climate everywhere is not possible but
we can designate certain areas as more equal
 Started as a urban development tool in the 1960s, with a
loan from the World Bank
 258 Organized Industrial Zones, 100 fully operational
 Rapid spread in the 1990s...
 Private-public partnerships were facilitated through the
local chambers
 Evolved over time to obtain regulatory oversight
 The Law on OIZs was enacted in 2000, after 40 years of
learning
 Changes came in 2009; a continous learning process....
Economic transformation in Turkey
Performance of OIZs in Turkey
25
Number
of days to get infrastructure connected: firms in OIZs and non-OIZs
20
15
10
5
0
non-OIZ
OIZ
Telephone connection
non-OIZ
OIZ
Elecricity connection
non-OIZ
OIZ
Water connection
Number of days to get licenses and permits: firms in OIZs and non-OIZs
120
100
80
60
40
20
0
non-OIZ
OIZ
Construction permit
non-OIZ
Operation license
OIZ
non-OIZ
OIZ
Health&Safety permits
Kaynak: TEPAV – World Bank Investment Climate Assessment Survey 2005
Economic transformation in Turkey
Some food for thought
 OIZs are highly instrumental regional actors
 One-stop shops
 Superrior infrastructure
 Contribution to cluster enhancement (technoparks,
vocational training schools, logistics centers)
 But do not forget:
 Building OIZs alone do not lead to industrial
development
 They should be part of an overall industrial strategy
• Human capital and skills, off-site infrastructure/logistics,
technology, access to finance