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BOOSTING REGIONAL COMPETITIVENESS in TURKEY Boosting Regional European Union and the Republic of Turkey BOOSTING REGIONAL COMPETITIVENESS IN TURKEY Boosting Regional Regions play an increasingly important role in OECD economies. They are responsible Competitiveness With wide disparities in the economic development of its regions Turkey is among the in Turkey OECD countries now taking an active interest in regional development policies and regional competitiveness. HIGHLIGHTS The OECD conducted its project, Boosting Regional Competitiveness in Turkey, to help improve regional and sectoral competitiveness policies in Turkey and to make co-ordination between newly created development agencies, the Ministry of project was implemented by the OECD in close collaboration with the Ministry of easy-to-read document. European Union and the Republic of Turkey Turkey Highlights covers [12].indd 1 25/08/2016 16:53 Boosting Regional Competitiveness in Turkey Highlights September 2016 NP This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This document has been produced with the financial assistance of the European Union. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the European Union. BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 3 FOREWORD The OECD conducted its project, Boosting Regional Competitiveness in Turkey, from 2014 to 2016, in close collaboration with Turkey’s Ministry of Development. Co-financed by the European Union and Turkey, it sought to enhance regional and sectoral competitiveness policies and improve co-ordination between the regions’ Development Agencies, the Ministry of Development, and other institutions. The project’s findings can contribute to responses to a number of Turkey’s current regional policy challenges, such as disparities among regions. They can also help prepare the authorities at all tiers of government to efficient participation in EU regional policy, of which cohesion, solidarity, and subsidiarity are the overarching principles. The project was built on four substantive components and a cross-cutting capacity-building component. Work on the four substantive components yielded four thematic, Turkey-specific reports: • Assessing Regional Competitiveness in Turkey • An Introduction to the Economic Structure of Turkey’s Regions • Enhancing Co-ordination Between Central Institutions and Development Agencies: Horizontal and Vertical Co-ordination of Strategies • Strengthening the Spatial Dimension in Turkey’s Sector Strategies This paper summarises the main points of the four reports, painting a coherent picture of key findings in one single easy-to-read document. Rather than introducing the findings of each report one after the other, it seeks to outline the overarching logic of the project. To that end, it is divided into three sections, each of which looks at findings from one or more of the reports. The first section describes the current disparities in competitiveness and economic performance between regions in Turkey. The second reviews how national and regional development policy institutions and bodies co-ordinate their activities. It also proposes insights into existing challenges. As for the third section, it considers some of the many possible analyses of local economic structures that development agencies can conduct and illustrates how to use a number of selected indicators. BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 3 1. Strengthening regional policies in Turkey 1.1. Regions as drivers of growth and inclusiveness Policy makers worldwide are increasingly recognising that regions can help drive national competitiveness. In recent decades, analysis of regional contributions to national growth, productivity and innovation has gained momentum and the concept of competitiveness has become a key dimension of regional development policy. Regional policies which truly foster the competitiveness of firms help attract investment, yield substantial economic gains and, ultimately, contribute to improving standards of living. In an era of policy interconnectedness, relevant, sustainable, multi-dimensional regional policies depend on the effective co-ordination of national and regional strategies, as well as on sector strategies. Policy makers and practitioners are striving not only to link regional policies to overarching national goals, but to gain deeper, more granular understanding of their regions’ economic structures. In that respect, new perspectives on how regions interact in global and domestic value chains have emerged and benchmarking tools have been developed. In particular, the European Union’s Nomenclature of Units for Territorial Statistics (NUTS)1 provides a classification standard that references subnational divisions and allows comparisons between countries. Large countries with wide disparities in regional economic development particularly stand to gain from boosting regional competitiveness through policies tailored to regions’ defining features and needs. As inter-regional disparities are now a common policy challenge in OECD and non-OECD countries alike, regions lie at the core of governments’ efforts to spur growth, improve well being, and tackle inequalities. 1.2. The economic performance and competitiveness of Turkey’s regions: a mixed picture Turkey grapples with considerable regional competitiveness challenges despite the robust growth it has enjoyed and the structural change it has undergone in recent years. Traditionally, its national economic performance has been driven by western regions, particularly the productive and commercial hubs of Istanbul, Ankara and Izmir and the industrial strongholds of the Marmara region. The so-called “Anatolian Tiger”2 regions have also recently strengthened their industrial base, with significant rises in employment in manufacturing and services (OECD, 2014). Most eastern regions, however, continue to perform far more weakly, with agriculture still the mainstay of economic activity. With disparities in per capita gross value added between the top and lowest performing regions among the greatest in the OECD, regional development stands high on Turkey’s policy agenda. The report on Project Component 1, Assessing Regional Competitiveness in Turkey, seeks to develop a framework for assessing and benchmarking competitiveness in Turkey’s 26 NUTS II regions (Figure 1). The framework builds on two pillars: • Economic performance, which pertains to key economic outcomes and includes income productivity or export diversification. • Determinants of competitiveness, which comprises factors that shape regional competitiveness, such as health and the environment, technology and innovation, or education and skills. 4 BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 5 1. STRENGTHENING REGIONAL POLICIES IN TURKEY Figure 1. The framework for assessing regional competitiveness Regional competitiveness index Economic performance Determinants of competitiveness Income and productivity SMEs and entrepreneurship Productive structure Technology and innovation Education and skills Labour market Infrastructure Health and environment Source: OECD (2016), Assessing Regional Competitiveness in Turkey, OECD, Paris. Assessing the aggregate competitiveness of Turkish regions at the NUTS II level against the framework reveals wide differences (Figure 2). Those located around the Sea of Marmara – especially region TR103 İstanbul and the Turkish capital, Ankara, i.e. region TR51 – are the most competitive. Most of the central Anatolian regions perform mid-level, while the eastern regions have yet to catch up in all eight dimensions in both pillars – income and productivity levels, productive structures, SME and entrepreneurship development, innovation, education levels, labour market performance, infrastructure and/or health and environment. Figure 2. A map of regional competitiveness by region Index scores (0 to 10) 0 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 TR21 TR81 TR82 TR10 TR42 TR83 TR90 TR41 TRA1 TRA2 TR22 TR51 TR72 TR33 TRB1 TR71 TRB2 TR31 TR52 TR63 TRC3 TR32 TRC2 TR61 TR62 TRC1 Source: OECD (2016), Assessing Regional Competitiveness in Turkey, OECD, Paris When economic performance alone is assessed (Figure 3), the regions that do best appear to be located in western Turkey along the Istanbul-to-Ankara corridor. The further east a region is, the lower its income and productivity levels are likely to be. The top-ranking regions are characterised by high income and productivity levels, greater reliance on manufacturing as opposed to agriculture, openness to international trade, a high degree of economic diversification and foreign investment. BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 5 1. STRENGTHENING REGIONAL POLICIES IN TURKEY Figure 3. A map of regional competitiveness by region Economic performance score 0 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 TR21 TR81 TR82 TR10 TR42 TR83 TR90 TR41 TRA1 TRA2 TR22 TR51 TR72 TR33 TRB1 TR71 TRB2 TR31 TR52 TR63 TRC3 TR32 TRC2 TR61 TR62 TRC1 Source: OECD (2016), Assessing
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