Economy and Technology in Turkey

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1. Continuing Economic Stability and Advancing Structural Reforms 

Turkish economy has made important gains after the 2001 crisis. Leading among these are the achievements in growth, inflation figures, improved budgetary balance and increases in foreign direct investments. A favorable international economic atmosphere and a period of financial abundance have played a part in this achievements, as much as did the introduction of structural reforms, decisive implementation of the economic program, strict observation of the budgetary discipline, political stability and progress toward full membership to EU.


Despite these achievements, unfortunately, no progress has been made in solving the problems regarding the competitiveness of the industrial sector. Structural and micro reforms that would buttress competitive strength could not be undertaken. During the same period the over-valuation of Turkish currency has also inhibited the industrial competitive strength. Despite these negative factors in play, the industrial sector nevertheless managed to increase exports and become the locomotive of economic growth. However, this achievement has been in turn shadowed by the fact that imports have increased faster than the exports; and by an unprecedented figure of trade deficit.


During the second half of 2007, a payments crisis in US real estate’s sector emerged, causing anxiety in global markets and provoking a setback in the positive expectations that had been prevalent for some time. Two important elections – presidential and parliamentary – held in Turkey in the same year delegated the economy to a secondary position; and, compared to previous years, a relatively bleak picture emerged as a result. For the first time in the post-2001 period, the growth objective was underachieved: whereas the aimed annual figure was 5 %, the realization was at 4,5 %. Even though the trade deficit decreased proportionally, it surpassed the aimed figure of 54,7 $ billions and reached 62,8 $ billions. The trade deficit contributed to the current account deficit and the latter broke a record by reaching 37,4 $ billions. Furthermore, during the last two years, hard times began with regard to the anti-inflationary struggle, and both in 2006 and 2007 the objectives were underachieved: 9,7 % instead of 5 %; and 8,4 % instead of 4 %, respectively. All these demonstrate that a critical period is now reached in the economy.


In the international scale, pessimist prospects have emerged as weaknesses in many markets persisted, deepened, grew and spread, to the effect that expectations about worldwide growth have fallen down to lows unprecedented during 2000s. Without doubt, Turkish economy is much more fortified and stronger now than in the past. Nonetheless, it should not be forgotten that fragility still exists. The recent growth has been mostly dependent on foreign financial inflows. Therefore, possible negative developments with regard to monetary liquidity in international markets may affect Turkish growth figures negatively by hindering inflows. The situation is exacerbated by the fact that global negativities are now being accompanied by question marks about domestic political stability. In order for this dire strait to be left behind with the least possible harm, greatest attention should be paid to the economy and measures should be taken swiftly, prioritizing the competitive strength above all. The gains that have been made since 2001 would be at risk unless such measures are put into effect without any more delay.


2. Sustainable Development and Energy Supply Security 
One of the most important objectives of statecraft should be to facilitate the conditions of sustainable development. Sustainable development refers to three aspects of sustainability – in economic, environmental and social welfare terms. It expresses a relationship between these three complementary aspects and a necessity to build a balance between them. In terms of sustainable development it is of utmost importance to achieve justice in income distribution, to protect the environment and to meet the increases in the demand for energy in a way that such a balance would be kept. Securing energy supplies for the long term is of primary necessity. Energy supply security can be provided by a diversification in supplying countries and supply mechanisms as well as in the types of fuels and relevant technologies.


Turkey’s special geographical position provides various opportunities in this regard. Firstly, various resource correlations are rendered possible by the availability of various resources. The fact that 70 % of the known energy resources reside in the east and south of Turkey (in Caucasus, Central Asia and Middle East) whereas an important share in the consumption takes place in Europe, puts Turkey in a position of transit route. It gives the opportunity to Turkey to build an energy corridor between east and west. In addition to this, since many energy transfer lines intersect in Turkey and they are directed to new destinations thereafter; and since Turkey also provides them with port terminals; Turkey also has the opportunity to build energy hubs of worldwide importance.


Turkey has to decrease its current import-dependent position. Energy resources should be diversified; hydraulic, solar and wind powers should be exploited to a greater extent; and search for new fossil fuels should be given a greater attention. Moreover, increased transfer of fossil fuels from the Middle East, Caucasus and Central Asia, their processing in certain energy terminals and their transport to Europe through maritime or pipelines would contribute not only to the agenda of energy supply security but also to Turkey’s economic development; and increase its geopolitical importance.


Attention should be paid to the fact that international prestige would accrue to Turkey if efforts toward the development of new energy technologies like hydrogen power could commence and come to fruition in Turkey. Development of energy technologies should therefore receive their respective share in the resource allocation.


3. Scientific and Technological Progress
Scientific and technological progress has historically contributed to the economic development of nations and has thus been an important element in their competition. In the future as well, scientific and technological progress is expected to follow the destination provided by economic policies and competitive strategies. Of fundamental importance in this context are the construction of the infrastructure necessary to build an informational society as well as increased care devoted to strategic Technologies like Information and Communication Technologies; Nanotechnology; Biotechnology and Genetics; Energy and Environmental Technologies; Material Technologies; Mechatronics; Design Technologies; and Production Process Technologies.


In order to realize technological progress and secure its articulation into economic development; scientific publications, patent acquisitions, high-tech industrial branches, information-led services and high-tech exports should be encouraged. Harmonization of scientific and technological research with the “real sector,” to the effect that it is responsive to the challenges of economic development, is needed. “Techno-economy Institutes” should be founded in order to achieve an integrated design of economic policies and scientific and technological policy; as well as to train able personnel (techno-economists) that would administer such a process. Techno-parks, which now boast the number of 30 country-wide, should be further multiplied, with an effort of increased cooperation between the university and the industrial sector.


If suitable conditions are provided, Turkey can also claim a share in the relocation of transnational companies’ R&D (research and development) activities, as part of a worldwide economic move “into the East.” Such conditions could only be established with continued political stability and economic growth; and with an effort to solve regional problems through peaceful diplomatic measures.

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