Turkey’s industrial policy 'unfinished symphony'

ANKARA - Anatolia News Agency

Turkey’s industrial policy needs to be expanded through different sectors, the World Bank’s director for Turkey has said, likening the phenomenon to an “unfinished symphony.”

Speaking at an event organized by the Development Ministry and the Economic Policy Research Foundation of Turkey (TEPAV), Martin Raiser said Turkey’s industrial policy was “waiting for completion, and so it may complete the symphony and have an industrial policy like a classical symphony.”

He also said the bank was looking forward to seeing Turkey’s development plans over the next five years.

Raiser said industrial policy could also include agriculture, as well as services. “I would say that for Turkey, it has to also be about services. Services account for over 60 percent of GDP and we have recently carried out an analysis of the competitive environment across the areas of Turkey’s economy.

The service sector ends up being one of the most regulated parts of the Turkish economy. So, 60 percent of your GDP is in sectors that have very antiquated entry licensing regimes, a lot of evidence for a limited competition.”

The bank official also said thinking about services as a key area for productivity enhancements and as a key area for targeted policy interventions may seem to make a lot of sense.

Raiser said Turkey had enjoyed a lot of growth without experiencing that much deepening of capital and added that export goods and the technological deepening of the economy was not where it should be.

“It has to do with the fact that you had a lot of growth as a result of the relocation of labor from low-productivity to higher-productivity sectors, but the model of the growth is a result of capital deepening. That has fundamentally to do with Turkey’s savings constraint,” he said.

“A larger amount of capital deepening means importing very large amounts of foreign capital. So even if we obstruct the technological content that FDI could bring, I think there is a discussion about what it is that is preventing Turkish companies or the Turkish economy from investing more fixed capital,” Raiser said.