Turkey, which is a strong regional actor and is gaining importance in the energy equation with each passing day, has also become an important nation on a global scale.
In order to overcome threats and the operation Turkey is faced with through exchange rates, it must strengthen its economy during this period in which the new world’s global economic balances are shifting.
So what must Turkey do within the framework of a new economic approach in the following period?
Domestic production should be increased, dependency on imports must be decreased
Turkey should allocate more resources to domestic production and produce goods imported from overseas. This is not an import substitution. Thus, Turkey will produce at a low cost and also export its excess production.
Furthermore, products that could result in an increase of current account deficit must be identified and action must be taken. Major strategic projects that have been initiated in the recent years should be accelerated in order to reduce Turkey’s energy dependence.
Most importantly, resources should be used more selectively and for strategic investments, not indiscriminately for every industry. The incentive system must be arranged accordingly.
These steps will increase production and reduce current deficit and the need for external financing.
New export strategy and the need to bolster export quality
Benefiting from its geographical location, Turkey has the opportunity to access many countries and continents of the world. On one hand, Turkey needs to access various countries by diversifying markets and on the other it needs greatly boost initiatives to increase trade.
Many countries should be turned into target export markets with the cooperation to be established between nongovernmental organizations – mainly Foreign Economic Relations Board (DEIK) – and the government. Here, DEIK plays an important role. Apart from its role as work councils, it should act like a think-tank, issue reports on countries and produce guides for investors regarding relevant countries. The trade ministry should also dispatch trade experts to each country.
Efforts to utilize local currencies in trade in line with Turkey’s recent alliances with Russia, Iran and China should be sped up.
During this period, Russia, Iran and Turkey were impacted by sanctions imposed by the U.S., and China has also suffered from high taxes and tariffs imposed by Washington. Therefore, the circumstances can further accelerate the trade process with local currencies.
R&D should be accelerated
Turkey must boost the production of goods which require advanced technology and know-how, which Turkey imported for many years. In order to achieve this, we need to allocate more resources to research and development (R&D).
The portion allocated to R&D, which is still at the rate of one percent according to Turkey’s gross domestic product (GDP) must be increased.
The U.S. allocates 2.79 percent of its GDP to R&D, while South Korea allots 4.23 percent and Japan designates 3.29 percent.
We know that R&D expenditures have a direct positive effect on both economic growth and exports. Furthermore, R&D expenditures provide countries with a competitive advantage, the ability to attract direct foreign capital, and many other positive impacts such as reducing technological dependency.
This step will reduce the imports of many advanced technology products that we have footed the bill for many years, and perhaps even halt import dependency completely.
The need for external financing should be reduced
Acceleration of the aforementioned steps regarding production will reduce Turkey’s need for external financing, and also negate the external operations and speculation that have been conducted or will be conducted.
Moreover, funding resources other than those provided by the unipolar world led by the U.S. should be made a viable option to meet financing needs.
Follow-up and monitoring mechanism
In Turkey, several programs and strategies are being prepared to be implemented. However, unfortunately, there is no fully functional follow-up and monitoring mechanism to identify how many of these actions are effectively implemented.
The follow-up and monitoring mechanism will increase both the efficiency of expenditures and the effectiveness of the steps to be taken within the framework of each program to be implemented in the new period.