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Tepav Economic Policy Research Foundation of Turkey Ümit Özlale EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum.

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Presentation on theme: "Tepav Economic Policy Research Foundation of Turkey Ümit Özlale EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum."— Presentation transcript:

1 tepav Economic Policy Research Foundation of Turkey Ümit Özlale EMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum Geneva, September 26, 2012

2 Turkeys foreign trade dynamics in eight slides Slide 2

3 Turkey in the region: Rapid growth in manufacturing after mid-90s Share in exports of the region and level of industrialization (1996) Countrys share in total manufacturing exports of the region Share of manufacturing in Countrys total exports (%) Source: UN COMTRADE, TEPAV Calculations Slide 3

4 Today Turkey is the largest manufacturer in the region (thanks to Customs Union and closer EU link) Countrys share in total manufacturing exports of the region Share of manufacturing in Countrys total exports (%) Source: UN COMTRADE, TEPAV Calculations Share in exports of the region and level of industrialization (2010) Slide 4

5 Improvements in productive capacity:

6 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

7 And loss of competitiveness is a challenge: Comparison of Turkey with EU- Accession 12 Source: WEF ( ), REF Calculations Slide 7

8 Comparison of Turkey with BRIC in terms of competitiveness measures Source: WEF ( ), REF Calculations Slide 8

9 Regional economic integration is the current trend Geographical distribution of Turkeys exports: Slide 9

10 Turkeys west & east: Varying degrees of European integration Source: TURKSTAT Bursa USD 11.2 billion İstanbul USD 51 billion Kocaeli USD 10 billion Konya USD 1 billion Gaziantep USD 3.6 billion İzmir USD 6.6 billion Kayseri USD 1.1 billion Slide 10

11 Regionalism vs. Multilateralism: Case for Turkey Slide 11

12 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

13 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

14 However; Danger of being excluded from the RTA block for non-members Conflicting multiple RTA memberships (Spaghetti Bowl) Slide 14

15 How does that affect Turkey? Fact 1: Europe is Turkeys 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

16 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 Slide 16

17 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. Slide 17

18 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


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