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tepav. Economic Policy Research Foundation of Turkey. EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum Geneva, September 26, 2012. Ümit Özlale. Turkey’s foreign trade dynamics in eight slides.

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Mit zlale

tepav

Economic Policy Research Foundation of Turkey

EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISMWTO Public ForumGeneva, September 26, 2012

Ümit Özlale


Turkey s foreign trade dynamics in eight slides

Turkey’s foreign trade dynamics in eight slides


Turkey in the region rapid growth in manufacturing after mid 90 s

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


Today turkey is the largest manufacturer in the region thanks to customs union and closer eu link

Today Turkey is the largest manufacturer in the region(thanks to Customs Union and closer EU link)

Share in exports of the region and level of industrialization (2010)

Country’s share in total manufacturing exports of the region

Share of manufacturing in Country’s total exports (%)

Source: UN COMTRADE, TEPAV Calculations


Improvements in productive capacity 1984 2011

Improvements in productive capacity:1984-2011


Mit zlale

However, Turkey has no star industries in exports

Rising sectors

Star sectors

Traditional sectors

Failing sectors

Market share in 2011

Source: UN COMTRADE, TEPAV calculations


And loss of competitiveness is a challenge comparison of t urkey with eu accession 12

And loss of competitiveness is a challenge:Comparison of Turkey with EU- Accession 12

Source: WEF (2007-2008), REF Calculations


Comparison of t urkey with bric in terms of competitiveness measures

Comparison of Turkey with BRIC in terms of competitiveness measures

Source: WEF (2007-2008), REF Calculations


Regional economic integration is the current trend

Regional economic integration is the current trend

Geographical distribution of Turkey’s exports: 1970-2011


Turkey s west east varying degrees of european integration

Turkey’s west & east: Varying degrees of European integration

İstanbul

USD 51 billion

Kocaeli

USD 10 billion

Bursa

USD 11.2 billion

İzmir

USD 6.6 billion

Kayseri

USD 1.1 billion

Konya

USD 1 billion

Gaziantep

USD 3.6 billion

Source: TURKSTAT


Regionalism vs multilateralism case for turkey

Regionalism vs. Multilateralism:Case for Turkey


Regional trade agreements

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.


Why the rise of rtas and the fall of multilateralism

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.


However

However;

  • Danger of being excluded from the RTA block for non-members

  • Conflicting multiple RTA memberships (Spaghetti Bowl)


How does that affect turkey

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.


Does diversification of markets help

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 sophistication

    • Political issues


Is mena the solution

Is MENA the solution?

  • In terms of diversifying the exports, yes.

  • However, it does not provide a long-term solution

    • Quality of exports and the value added

    • The size of the MENA market as a whole

    • Growth prospects for the MENA region and the increasing uncertainty.


To conclude

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.


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