cities

A city in search of its historical glory: Gaz›antep

Gül Berna Özcan

Why does everybody regard Gazi- antep is entirely based on indigenous entation for a prosperous future antep entrepreneurs as cunning? entrepreneurship, local solidarity within Europe. The challenge of Why is a possible model and pride, and small and medium-si- upgrading its technology and hu- for the economic and social deve- zed businesses. Small and medium- man resources for competition will lopment of southeastern ? sized cities and medium-sized firms determine the place of Gaziantep's These questions are engendered by provide the key to reduce regional economy and social life in an integ- an important trend in . In disparities, to control rapid migrati- rated Europe open to global compe- recent years, an increasing number on, and to integrate into the Europe- tition. If Gaziantep does not of medium-sized towns have been an economy. But they also have succeed, it will simply become a lost showing rapid economic develop- serious weaknesses which may un- peripheral region of a more diversi- ment and population increase. Ga- dermine their achievements in the fied and competitive world of trade. ziantep, together with towns like long term. The alternative path is a more integ- Denizli, , , and Mani- There are especially large econo- rated and competitive role that the sa, is probably the best example of mic risks for Turkish cities and bu- local economy will play in Europe- this trend. These second rank cities, sinesses in the Customs Union. The an and Middle Eastern markets. following large metropolitan towns, main challenges are technology and are the engines of growth in their manpower. We live under the thre- Gaziantep’s economic history region. While the regional and ru- at of catastrophic marginalization Gaziantep's economic develop- ral-urban disparities remain, this of the Turkish small and medium- ment has been based upon local reso- growth shows that the major social sized enterprises [SMEs] and medi- urces and craftsmanship traditions and economic restructuring of Tur- um-sized towns in the process of rather than direct government in- key will be achieved through diffu- integration and regional competiti- vestments and incentives. At the end sed industrialization. The social, on in the coming years. Competiti- of the 19th century Gaziantep had a cultural and political implications ve and innovative businesses of the large population of 81,040 and di- of this process are also crucial and advanced economies of western Eu- versified economic activities. Accor- deserve particular attention . rope might easily invade and domi- ding to the Ottoman census How can we explain Gaziantep's nate semi-peripheral regions like classification, 65,398 were Muslims economic success and what about its Gaziantep. and the rest were Armenian weaknesses? The well-known and Consequently, both SMEs and (11,610), Jewish and Coptic. As part admired economic success of Gazi- medium-sized cities need a new ori- of the Aleppo Province, Gaziantep

PRIVATEVIEW/WINTER 1996 70 (Ayintab as it was called then) was me a small-scale industrial centre of vities than its neighbouring provin- an important centre on trade routes. the Southeast in the repair and small ces. This creates a market superiority Its economy was based on strong ag- scale production of vehicle and agri- over its hinterland as many back- riculture, commerce and manufactu- cultural machinery parts. ward towns and villages are depen- ring. Vineyards and pistachio Commercial activities have histori- dent upon outside sources of goods plantations were two sources of es- cally been very important for the city and services. The economic hinter- pecially valuable agricultural pro- economy. In the 1960s and 1970s a land of Gaziantep includes parts of

Perhaps the most important factor for the success of Gaziantep is the strong sense of local identity among small and large businessmen. ducts. Tanning, cotton and silk new dimension was added to this and the neighbouring provinces and it re- weaving, alcoholic beverages and so- Gaziantep became a major centre of aches the markets of the 13 eastern ap were the main manufacturing ac- contraband trade for the whole co- provinces. The province of Gazian- tivities. There were almost four untry. This certainly contributed to tep is considered the “pole of thousand looms in the city by the the city’s economic growth and capi- growth” of the Southeastern Anato- end of the 19th century. As the mul- tal accumulation. But after the trade lia Project (Güneydo¤u Anadolu Pro- ti-religious and ethnic structure of liberalization of the 1980s, this busi- jesi-GAP), since it contributes 40% the gave way to na- ness lost its importance. of total manufacturing in this region. tion states, minorities left Gaziantep. There are over 27,700 small This caused a shortage of skilled pe- Sectoral development and trade firms in the city employing 60- ople and led to an economic decline Based on its share of business es- 80,000 people, including unregiste- in the city during the early years of tablishments in the national total, red workers. This is a much higher the Republic. Gaziantep's economy is amongst figure than that of larger companies The city’s economy greatly benefi- the leading provinces in Turkey. in the province. Therefore, employ- ted from state incentives for industry The top five cities are ‹stanbul with ment creation by the small firms is before the second world war. The 20.3% of businesses, Izmir (7.0%), crucial for the local economy. weaving industry developed in the (6.7%), (3.9%), and These firms also create income for 1930s and processing of agricultural (3.6%). They are followed family members and relatives in the products in the 1940s. During the by the second rank cities: Konya social network. The data presented 1950s and 1960s, Gaziantep did not (3.0%), Içel (2.7%), Gaziantep in Table 1 show that most firms are get direct state investment, except (2.6%), (2.2%), Kayseri concentrated in the retail and whole- for a cement factory that started (1.6%) and Denizli (1.5%). Altho- sale trade (60.3%) and manufactu- production in 1961. However, ugh this distribution indicates the ring (21.1%). One of the biggest small and large private sector firms emergence of new economic centres problems for these businesses is the began to grow in this period. The in the country, it also shows the limited capacity for growth, since construction of the Birecik Bridge in prevailing disparities among regions firms are very small (1-9 employees). 1956, which connected the city with and cities. Over the past ten years, They often rely on unpaid family and reduced transportation for instance, ‹stanbul increased its employment and unskilled rural mig- costs, opened the eastern and middle share in the number of business es- rants. Especially in manufacturing, Anatolian markets. Motor vehicles tablishments and in Turkey’s gross the number of small establishments and mechanized agriculture incre- domestic product at the expense of is remarkably high. This is caused ased the need for machinery parts rural areas and small towns. more by the continuation of artisa- production and repairing. In the Gaziantep has a better developed nal traditions than by the presence of following decades, Gaziantep beca- small firms sector and economic acti- lean, innovative businesses. These

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the success of Gaziantep is the strong sense of local identity among small and large businessmen. Therefore, growing businesses remain in the city rather than moving elsewhere. This sets Gaziantep’s business culture apart from that of similar towns. To- day some of these large firms are not just influential in their region but al- so control the Turkish market. The entrepreneurs’ Gaziantep seeks to become expectations of the economic and initial inspira- center of tions for their busi- the Southeast ness are based on Anatolia Project concerns about (GAP) their own and their firms employ child and teenage male All small firms need a certain families’ wealth labor who are obviously unskilled amount of start-up capital and/or and living standards. The respecta- and often not registered with the so- previous involvement and local con- bility of a profitable business is also cial security institutions. tacts in order to survive. There are an aspiration in the community two important influences for entrep- where families know each other and Indigeneous entrepreneurship reneurs in this context. First, family reputations are important. Entrepreneurship is a search for and friends are crucial to maintain a opportunities and wealth in order to business tradition. They provide fi- Small and medium-sized businesses utilize capital and/or skill in the local nancial support, cheap or free family The average number of workers market and it is not linked to unemp- labour, business experience and a employed by Gaziantep’s SMEs vari- loyment or redundancy. According good social environment for the ent- es from sector to sector. It is highest to my survey results, there are diffe- repreneur. Second, the cultural ex- in food, textile, leather, wood, pa- rent motives behind the entreprene- perience of business involvement as per, metal and non-metal products ur's decision to start up a business in an apprentice is very important. and lowest in basic metal and chemi- Gaziantep. The most common moti- This serves as a force of socialization cal product industries. Small firms ves are family influence (24.1%), of young males into skills and econo-

We can see that the problems and opportunities of Gaziantep and other second rank cities show the real direction and potential of the Turkish economy. previous work experience (19%) and mic activities. concentrate in the traditional sectors. a search for independence and profit As the firm grows and expands the Technological improvements and in- seeking (18%). These are followed business dynamics and support net- dustrial research and development by the desire for personal satisfacti- works change. But one characteris- are quite poor in most industries. on and enjoyment, easy and comfor- tic still remains important. That is The size of small businesses in dif- table daily routine (particularly in the involvement and help of family ferent sectors is closely related to the commercial sectors) and a less com- and friends in the home town. Per- size of the local and regional mar- petitive atmosphere. haps the most important factor for kets. For example, the construction

PRIVATEVIEW/WINTER 1996 72 processing and packaging, textiles, and cottage industries in medium-si- zed towns have particularly benefi- ted from this indigenous production. These characteristics are similar to countries in Southern Europe such as Portugal, Spain, and . Small businesses in these countries typically imitate new products and business practices. This practice di- minishes profit le- Gaziantep’s trade links with vels and leads to the Middle East increasing competi- are especially tion as the number strong as it sends 76.3% of its of small firms in a exports to particular trade or the region. production area increases and satu- sector developed along with urbani- networks with weak cooperation and rates the market. zation and increasing family income. temporary business relations. Yet, imitation in manufacturing is Similarly, food processing and textile There are three main problems crucial for the artisanal development industries flourished due to regional with small firm growth. First, imi- of entrepreneurs. Entrepreneurs demand in southeastern Turkey as tation rather than innovation sha- who were ex-employees and appren- well as in the Middle East. Gazian- pes business practices. Second, lack tices develop their skills and know- tep’s trade links with the Middle of trust among business people and ledge of machines through repairing East are especially strong as 76.3% limited strategic vision create short- and imitation. The problem for the- its exports go to Middle Eastern co- sighted relations. Third, instability se small machinery manufacturers is untries. This is followed by African in the national economy adversely the widening gap between the capa- (9.2%) and Asian countries (5.4%). affects business prospects. These bilities of what they produce and the impede long term stable business re- best new designs. Bottlenecks for local business lations, economic growth and tech- In flexible specialization, small nological investments. Trust and Vision firms reach economies of scale thro- Small firms in Gaziantep are very ugh networking by taking advantage Imitation versus Innovation vulnerable to macro economic chan- of a wide range of choices for supplies Most Gaziantep firms do not inno- ges and government policies. Most or services. The stable business cont- vate but diffuse and alter technology such firms have complex trade rela- racts and sub-contracting relations through widespread imitation. Cer- tions with big and small businesses. help small businesses to develop their tainly, there is a possibility to move This makes them susceptible to any skills and products. Small firms gain from imitation to innovation in these fluctuations in the business environ- control of production, design and firms, but present practices show ment including bottlenecks in their marketing through specialization and that this is unlikely. Gaziantep firms supply lines. These vulnerabilities modern technologies. Large compani- play an important role in introdu- mean that personal and business es also benefit from this process as cing and digesting new product or trust between entrepreneurs is cruci- they externalize risks. However, business techniques into the local al for deals and agreements. Howe- small and large firms in Gaziantep markets and they spread into other ver, neither partnerships nor and in Turkey as a whole have quasi- small and medium-sized firms. Food business relations last long, due to

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Industry and business establishments between 1985 and 1992 in Gaziantep

Number of establishments Annual Ave. Persons Engaged 1985 1992 (%) 1985 1992 (%) Manufacturing 5435 5852 (21.1) 16074 18183 (29.7) Electricity, gas, water - 19 - 1647 Construction 117 198 918 1101 Wholesale & retail trade 12135 16708 (60.3) 22476 30309 (49.6) Transport/commun. 176 232 590 709 Financial institutions 460 722 832 1252 Social, personal services 3025 3986 (14.4) 6965 7946 (13.0)

Total 21,348 27,717 47,855 61,147

Turkey share (%) 2.4 2.6 2.2 2.2

Source: General Census of Industry and Business Establishments 1992, State Institute of Statistics, Ankara. mutual mistrust and corruption in and conspicuous consumption by the economic development. Business- the local economy. Even among fa- entrepreneurs and their families. men are willing to invest and are ac- mily members and relatives, mana- Small businessmen are stimulated by tively putting pressure on the gerial difficulties and profit a wealth seeking impulse, and not by central government to improve their distribution cause serious disputes investment in innovative and gro- business environment. To offset the and even lead to a break up in relati- wing business. Generally, entrepre- debilitating impact of the economic ons. Fake bonuses and cheques and neurs in all sectors want to secure embargo against Iraq, the city busi- unexpected business failures affect their capital and seek more profitable nesses have been looking for new local firms in an economic sense but areas by diversifying their activities. markets. Chambers of Industry and further diminish trust and confiden- Commerce demand that Gaziantep ce among businessmen. This in turn Prospects be considered the leading city in the reduces the chances of network rela- Rapidly changing government po- GAP project. They lobby for a free tions and partnerships among firms. licies, inefficient bureaucracy and trade zone, and want to develop Another barrier to growth is rela- high inflation rates adversely effect better links with European markets. ted to the attitudes of the entreprene- the business environment in Gazi- Gaziantep also seeks a new role in urs. Many entrepreneurs learn the antep. Survival is a day-to-day the Middle East, historically its business in practice but lack manage- challenge for local businesses. economic lifeline. rial skills and education. Small busi- Many entrepreneurs have little trust The number of organized work si- ness owners and families want to in government and state instituti- tes in the city has been increasing in keep control of the key decision- ma- ons, so they largely rely on their recent years. The Gaziantep Organi- king and financial aspects of the bu- credibility in local markets. Financi- zed Industrial Zone was established siness. Therefore, they do not want al burdens are backbreaking as inte- in 1969 and experienced rapid to expand the business. There is also rest rates are prohibitive. Since growth. In 1995, 116 firms were some evidence that businessmen do unpaid debt can ruin reputations operating there and employing aro- not always make investments to imp- entrepreneurs are reluctant to take und 20.000 workers. Another rat- rove the current business and they big loans or commit resources to her recent development is the hesitate to hire qualified engineers, ambitious business projects. aggregated business and trade cent- accountants and marketing agents. Yet, so far Gaziantep has been res in the city. GATEM (Gaziantep There are speculative investments successful in organizing itself for its Industrial Center) incorporates 15

PRIVATEVIEW/WINTER 1996 74 Gaziantep has the opportunity as well as the potential to make this change. The city economy has to be diverted to the benefit of its citizens. The partnership for the future will focus on improving human resour- ces, increasing business capacity and competence. But this process is strongly linked to the future oppor- tunities and prospects for develop- ment nationwide. First, how the economic policies, distribution of resources, power of lo- cal governments will evolve in the ne- ar future is a critical question for any local initiative in Turkey. Second, how the GAP project will help overco- different business groups and over organize themselves. In a more com- me economic backwardness and whet- 1900 individual companies. YASEM petitive world where the power and her the clashes in the southeast will (Construction Industry Center) is a patronage of central governments are end soon remain crucial questions for project to host construction compani- diminishing, cities and regions have stable growth in Gaziantep. Third, es. Similar sites developed by medical to learn to act in their own interests what kind of economic opportunities doctors and other professionals are and to catch up with technological the Middle Eastern peace process and proliferating. This type of business and business changes. Turkey is no the Customs Union will bring to the aggregation helps the development of exception in this process and it is inc- region is also important for the inter- business standards and facilitates the reasingly important to make the ne- national relations and trade links of use of information in the local mar- cessary changes for a more the city. ket. It is also a sign of the organizing decentralized local governance struc- The real lifeblood of the Turkish capacity of the city. ture and to support indigenous deve- economy is not just the 20% which The future of local economies and lopment in rural areas and towns in ‹stanbul represents. It is distributed communities the country. This is not an easy pro- among the small and medium-sized lies in their cess and there are no ready made reci- towns throughout the country. We capacity to pes. Civic awareness about local can see that the problems and oppor- matters and the organized participati- tunities of Gaziantep and other se- Vineyards and pistachio on of businesses are essential for futu- cond rank cities show the real plantations were re prosperity. Lack of new direction and potential of the Turkish two sources technologies, poor business services, economy. The cities face a challenge. of especially weak business integration, macro They will either be active members of valuable agricultural economic problems, lack of manage- the integrated European market or be products. rial skills and qualified manpower, marginalized. If these cities fail and problems of business ethics are major do not realize their potential, they bottle-necks. There are other prob- will be relegated to the lost periphery lems as well that are largely related to of Europe. fast urban growth, insufficient urban Dr. Gül Berna Özcan infrastructure, and environmental Department of City and Regional Planning, degradation. Middle East Technical University

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