tepa v Economic Policy Research Foundation of Turkey Ümit Özlale EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum Geneva, September 26, 2012
Jan 25, 2016
tepavEconomic Policy Research Foundation of Turkey
Ümit Özlale
EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF
MULTILATERALISM
WTO Public ForumGeneva, September 26, 2012
Turkey’s foreign trade dynamics in eight slides
Slide 2
Turkey in the region: Rapid growth in manufacturing after mid-90’s
Share in exports of the region and level of industrialization (1996)
Country’s share in total manufacturing exports of the region
Share of manufacturing in Country’s total exports (%)Source: UN COMTRADE, TEPAV Calculations
Slide 3
Today Turkey is the largest manufacturer in the region
(thanks to Customs Union and closer EU link)
Country’s share in total manufacturing exports of the region
Share of manufacturing in Country’s total exports (%)
Source: UN COMTRADE, TEPAV Calculations
Share in exports of the region and level of industrialization (2010)
Slide 4
Improvements in productive capacity:1984-2011
Star sectors
Traditional sectors
Rising sectors
Failing sectors
However, Turkey has no star industries in exports
Market share in 2011
Slide 6
Source: UN COMTRADE, TEPAV calculations
And loss of competitiveness is a challenge:Comparison of Turkey with EU- Accession 12
0%
20%
40%
60%
80%
100%
120%Institutions
Infrastructure
Macroeconomic stability
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market sophistication
Technological readiness
Market size (140%)
Business sophistication
Innovation
Turkey wrt EU-Accession 12 averageEU-Accession 12 average
Source: WEF (2007-2008), REF Calculations
Slide 7
Comparison of Turkey with BRIC in terms of competitiveness measures
0%
20%
40%
60%
80%
100%
120%Institutions
Infrastructure
Macroeconomic stability
Health and primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market sophistication
Technological readiness
Market size
Business sophistication
Innovation
Turkey wrt BRIC average BRIC average
Source: WEF (2007-2008), REF Calculations
Slide 8
Regional economic integration is the current trend
Geographical distribution of Turkey’s exports: 1970-2011
Slide 9
Turkey’s west & east: Varying degrees of European integration
Source: TURKSTAT
BursaUSD 11.2 billion
İstanbulUSD 51 billion
KocaeliUSD 10 billion
KonyaUSD 1 billion
GaziantepUSD 3.6 billion
İzmirUSD 6.6 billion Kayseri
USD 1.1 billion
Slide 10
Regionalism vs. Multilateralism:Case for Turkey
Slide 11
Regional Trade Agreements There has been an increase in the
number of RTAs for Turkey. Some of them are EC, EFTA, Egypt,
Albania, Macedonia, Bosnia-Herzegovina, Croatia, Georgia, Israel, , Montenegro, Morocco, Palestine, Syria, Tunisia
And RTAs are flourishing worldwide, mostly in the form of FTAs and common markets.
Slide 12
Why the rise of RTAs and the fall of Multilateralism?
Problems in negotiation
More bargaining power with RTAs
Higher market share and easier market access
Barriers to trade and NTB in RTAs are reduced
more quickly and to a significant extent
And as long as multilateralism fails to liberalize
international trade, regionalism tends to continue.
Slide 13
However; Danger of being excluded from the
RTA block for non-members
Conflicting multiple RTA memberships (Spaghetti Bowl)
Slide 14
How does that affect Turkey? Fact 1: Europe is Turkey’s major trade partner Fact 2: Customs Union agreement between EU
and Turkey was a major factor for that close trade relation
Fact 3: EU gave pace to signing FTAs with its trade partners, which means that Turkey may no longer to reap the customs union benefits in the future.
Fact 4: Turkey can do almost NOTHING. It works like an exogenous negative trade shock.
Slide 15
Does diversification of markets help? Turkey has successfully diversified its
export destinations, after the global financial crisis.
However, EU is still (and should be) the main actor:Export sophisticationPolitical issues
Slide 16
Is MENA the solution?
In terms of diversifying the exports, yes.
However, it does not provide a long-term solutionQuality of exports and the value addedThe size of the MENA market as a wholeGrowth prospects for the MENA region
and the increasing uncertainty.
Slide 17
To Conclude; Although Turkey is one of the leading
exporters in the region, structural problems such as competitiveness exist.
There is a high probability that, increased regionalism and the associated EU policies will further emerge as a challenge.
MENA is far from providing a sustainable solution.
There should be more focus on a new industrial policy design.
Slide 18