World Bank (WB) Country Director for Turkey, Martin Raiser said that Turkey’s industrial policy was much like the “uncompleted symphony”.
Speaking in the “Industrial Policy in the World and in Turkey Program”, organized by the Ministry of Development and Economic Policy Research Foundation of Turkey (TEPAV), Raiser stated that Turkey’s industrial policy is, “waiting for completion and so it may complete the symphony and have industrial policy as a classical symphony”, regarding that they look forward to see the development plans of Turkey’s next five years.
Raiser, adding that industrial policy is not just about industrial policy and it can also be about agriculture, said, “I would say for Turkey, it has to also be about services. Services account for over 60 percent of GDP and we have recently carried up 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. No anchoring effect of the customs union in terms of standards etc. Thinking about services as a key area for productivity enhancements, as a key area for targeted policy interventions, may seem to make a lot of sense”.
Raiser stated thatTurkey has a lot of growth without as much as capital deepening and said the export goods and the technological deepening of the economy wasn’t where it was thought to be.
“It has to do with the fact that you had a lot of growth as a result of the realocation of labor from low productivity to higher productivity sectors but the model of the growth as a result of capital deepening. That has fundamentally to do with Turkey’s savings constraint.”
He said, “larger amount of the capital of deepening means importing very large amounts of foreign capital. So even if we obstruct from the technological content that FDI could bring I think there is a discussion about what it is, that is preventing Turkish companies or Turkish economy from investing more fix capital.”