Over the past twenty years, Turkey’s economy has diversified massively from a heavy reliance on a few sectors to an increasingly diversified economy.

In 1993, Turkey’s export economy was heavily reliant on three sectors: textiles, raw materials and agriculture which, combined, accounted for 60%.

Agricultural sectors accounted for just under a third of the exports and, together with raw materials, they accounted for almost half of exports.

Furthermore, in 1993, Turkey was almost dependent on Germany, which gobbled up almost a third of her exports.

As mentioned in previous articles, this early specialisation in textiles allowed Turkey to now benefit from economies of scale and economies of scope. Turkey has long been a key textile producer since the country has high quality cotton from the domestic market (the Aegean region), efficient technology and a relatively inexpensive work-force.

With Turkey’s location, textiles will continue to remain a strong sector.

 

Twenty years later, 2013

Turkey Exports 2013

As a percentage, the textiles now only account for 18%, not meaning that the sector has shrunk (in fact it has also grown) rather that there are more sectors in Turkey’s export portfolio.

The biggest increase came in transportation which increased sixfold to become now Turkey’s fourth biggest export sector. This sector will, no doubt, be expanding even more with the advent of Istanbul’s third runway.

Machinery and Fuels have also grown considerably again benefitting from Turkey’s prime location and cost-efficient workforce.

As is evident in the graphic above, Turkey now exports to a wider range of markets with a lower dependence on any single market, apart from Germany which has remained the biggest trade parntner. The reliance has, however, dropped considerable to under 10%.

The biggest increase came from Iraq.

Construction

The increase of trade to Iraq isn’t much of a surprise: the country is a direct neighbour and the massive reconstruction (after the controversial 2003 US-led invasion) was largely undertaken by Turkish construction firms who account for 74% of the construction sector in Iraq.

“Turkish firms get the lion’s share in the Kurdish region. Strategic projects were in general undertaken by them, and this trend continues,” Dilzar Selim from the trade ministry of regional administration in northern Iraq.

“They built the airport, roads, tunnels, large hotels, and shopping malls. We award important construction projects to Turkish companies because we trust them.”

Who needs who?

What is evident is the shift in the balance of power. Whereas Germany, USA, UK and France accounted for 40% of trade exports, today they only account for 22%. Although China and Russia still only constitute modest export markets, they are actively wooing Turkey. This does mean that businesses from Europe can no longer take Turkey’s traditional reliance on the West for granted.

Furthermore, as seen in Iraq, Turkish companies (especially in construction) are dominating in high growth markets such as the Middle-East.

This, yet again, not only highlights the importance of Turkey as an economic partner on the world stage, but also that the competition for business domestically in Turkey (and from other nations) is now fierce. A sound knowledge of the Turkish language and culture cannot be underestimated and will maximise the chances for success and minimise any potential, costly and avoidable mistakes.

 


 

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Neal Taylor is one of the developers of HandsOnTurkish and regularly writes about business, culture and language learning news.

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