Economists discuss vertical trade model

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Economists discuss vertical trade model
Oluşturulma Tarihi: Haziran 13, 2009 00:00

ISTANBUL - Vertical trade, which refers to different stages involved in the process of moving goods from the manufacturer to the consumer, is increasingly becoming dominant in global trade, economists at a conference in Istanbul say. They also point toward the rising danger of protectionism amid the global crisis.

The heavily export-dependent Turkish economy should adopt the "vertical trade" model that is gaining prominence around the world, according to economists speaking at a conference in Istanbul on Friday.

Vertical trade refers to several stages involved in the process of moving goods from the manufacturer to the consumer.

"If the vertical model expands [further] in the future, then some countries will continue to produce raw material, some will produce intermediate goods and some will do the final production. In this context Turkey is both an exporter and an importer," said Erol Taymaz of the Middle East Technical University, or METU.

Locomotive sectors
"Turkey’s main locomotive sectors such as textile, automotive, consumer electronics are very important for the country. When we consider these sectors in terms of trade Turkey has a really small share in the world," added Ebru Voyvoda, another economist at METU. The economists were speaking at a conference at Istanbul’s Koç University on Friday.

Everything in the vertical model reacts to and affects each other, said Fatma Taşkın of Bilkent University. "For example, if personal computer exports decline, this affects not just one country but several, as the United States produce chips or Brazil produces another part of the computer."

"Protectionism is a model that countries are using to get out of this crisis but this creates alarm in world trade," Taşkın said. "We see that anti-dumping tariffs have been rising since September last year."

"A foreign trade deficit is not a choice," said Zafer Yavan, secretary-general of the Turkish Industrialists’ and Businessmen’s Association, or TUSIAD. "Every country is searching for solutions to close foreign trade gaps," he told Hürriyet Daily News & Economic Review. "But right now, every country appears as both an importer and exporter, when looking from the vertical trade angle."

Noting that the automotive sector faces serious obstacles, Ercan Tezer, chairman of the Automotive Manufacturers Association, or OSD, said government cuts on special consumption tax and added value tax should be extended. "In order to develop the automobile sector, Turkey needs research and development and labor and design at the same time. If Turkey can both design and produce, then it will have the opportunity to compete with other countries," Tezer said.
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