Today GM, tomorrow Turkey’s exports
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Oluşturulma Tarihi: Haziran 03, 2009 00:00
Yesterday, we reported the obvious reasons for the dramatic failure of America’s industrial icon General Motors: tumbling sales and higher gasoline prices.
But most reasonable people know that’s far from the whole story. And most reasonable people can understand that this is a failure with lessons for Turkey.
The real reason this 100-year-old company is now basically a government charge in bankruptcy court is because it ignored a changing economy, failed to adapt and fought change at every turn. GM was strategically bankrupt at least a decade ago. At one point in the 1950s and 1960s, it literally owned a majority of the U.S. car market. But the seeds of its destruction were planted in the 1970s.
Resisting production of fuel-efficient cars after the first oil crisis and price rises of 1973-74, it began loosing its market share to agile Japanese competitors. In the 1980s, it fought regulation and import liberalization and by the 1990s it Ğ and other U.S. automakers Ğ thought they had beat the system. Gas-guzzling SUV’s were exempt as "farm vehicles" from fuel economy standards. With a momentary dip in energy prices, this loophole kept the company alive for a while. But analysts were predicting this false economy wouldn’t last and that a few token attempts at electric cars and hybrids were too little too late. They were right.
Turkey’s analagous dilemma is its export sector, now lead by automotive components and to a lesser degree textiles, which reflects a similar shortsightedness. Turkey’s $100 billion plus in annual exports now account for at least a quarter of GDP and this is responsible for much of the growth that the country witnessed until the advent of the global downturn. This is a success story. But the secret of this success is no secret at all: cheap labor that is at best moderately skilled. Much of Turkey’s exports are, in fact, "re-exports" reflecting arbitrage of labor value and not what economists call "added value."
Turkey has missed much of the "knowledge revolution." The premium of a young, energetic and eager-to-learn population has been squandered. Failure to improve patent enforcement has chased away investment in the life sciences sector. Thoughtless incentive policies have rewarded decrepit industries while high technology firms are punished with arbitrary administration of tax rules. Most importantly, the government has failed to support high schools and universities for nurturing the "knowledge workers" that are remaking the economies of China and India.
The few "technoparks" that opened amid fanfare and declarations of the "new Silicon Valley" are not enough. Turkey needs a true national "new economy" policy. It needs to embrace tax policy, investment incentives, R&D support and broad educational reform. None of this exists today. The fate of GM should be our warning.
The real reason this 100-year-old company is now basically a government charge in bankruptcy court is because it ignored a changing economy, failed to adapt and fought change at every turn. GM was strategically bankrupt at least a decade ago. At one point in the 1950s and 1960s, it literally owned a majority of the U.S. car market. But the seeds of its destruction were planted in the 1970s.
Resisting production of fuel-efficient cars after the first oil crisis and price rises of 1973-74, it began loosing its market share to agile Japanese competitors. In the 1980s, it fought regulation and import liberalization and by the 1990s it Ğ and other U.S. automakers Ğ thought they had beat the system. Gas-guzzling SUV’s were exempt as "farm vehicles" from fuel economy standards. With a momentary dip in energy prices, this loophole kept the company alive for a while. But analysts were predicting this false economy wouldn’t last and that a few token attempts at electric cars and hybrids were too little too late. They were right.
Turkey’s analagous dilemma is its export sector, now lead by automotive components and to a lesser degree textiles, which reflects a similar shortsightedness. Turkey’s $100 billion plus in annual exports now account for at least a quarter of GDP and this is responsible for much of the growth that the country witnessed until the advent of the global downturn. This is a success story. But the secret of this success is no secret at all: cheap labor that is at best moderately skilled. Much of Turkey’s exports are, in fact, "re-exports" reflecting arbitrage of labor value and not what economists call "added value."
Turkey has missed much of the "knowledge revolution." The premium of a young, energetic and eager-to-learn population has been squandered. Failure to improve patent enforcement has chased away investment in the life sciences sector. Thoughtless incentive policies have rewarded decrepit industries while high technology firms are punished with arbitrary administration of tax rules. Most importantly, the government has failed to support high schools and universities for nurturing the "knowledge workers" that are remaking the economies of China and India.
The few "technoparks" that opened amid fanfare and declarations of the "new Silicon Valley" are not enough. Turkey needs a true national "new economy" policy. It needs to embrace tax policy, investment incentives, R&D support and broad educational reform. None of this exists today. The fate of GM should be our warning.