Competitiveness of Industry in Turkey

This study was undertaken during the summer of  2006 with the cooperation of Ms.Gaye Ozerkan, in preparation of the Turkish Enlargement Business Council of the European Rountable of Industrialists for their meeting with the Prime Minister of Turkey which took place  in December 2006.


Purpose of the study was to identify the location of ERT companies with respect to the value chain of their activities in Turkey.  Number of other Turkish companies were included in the survey which consisted of interviews with the managers of those companies.



The principal question addressed to the managers was where their activities were located along the value chain, and their intentions to deepen those activities, and/or to expand them along the value chain.   The findings are of qualitative nature, and should  be interpreted in view of the limited number of companies interviewed.  However, those companies are leaders in their respective industries globally, and their comments and proposals merit attention.


The principal observation emergilng from the study was the concentration of activities in procurement, distribution and marketing and sales, and relatively small emphasis on manufacturing.  Only two ERT companies declared that they were present in production, an done company stated its involvement in automation techonologies.


What the findings highlight is that research and development activity is very small, and that  high value added inputs are imported. An interesting finding indicates the emergence of Turkey as a hub addressing neighbouring markets.



The study inquired into the causality system  behind the picture  illustrated by the value chain, emphasizing  the respective enablers and impediments.  Such enablers include the educational infrastructure, the  labour market and the related legislation, red tape, corruption, availability  and cost of finance,physical-transportation-energy infrastructure, raw material accesibility, trading environment, non-market elements and incentives. 


The educational infrastructure, availability and cost of finance, and theoverall infrastructure was identified as the major impediments.  The other areas stood with  their positive as well as negative aspects vis a vis competitiveness.  Companies were  not able to identify any factor which played a positive role in increasing their competitiveness.



The interviews included recommendations of the companies, which are listed in the table  titled “Policy Recommendations  Oriented to Increase Competitiveness of Industry”.  They are divided into two categories: fundamental  policy recommendations which include legislation, infrastructure and non-market factors,  and growth oriented policy recommendations which include strategic, human capital, finance and trade/market related factors.



The study also included a fuzzy map analysis, where the interviewees shared their views regarding the interaction among a wide range of factors affecting competitiveness.  Four groups of factors emerged as “problem areas”,  and one areas as a contributor to competitiveness.  The other factors all impacted competitiveness negatively.  The negative factors were the educational infrastructure and the system behind it, bureaucracy including intellectual property rights, finance and the overall infrastructure.  The positive factor was proximity to markets.