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.
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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 Regional Competitiveness in Turkey, OECD, Paris.
When it comes to determinants of competitiveness (Figure 4), regions’ rankings are similar to their standings in the Regional Competitiveness Index as a whole. The inference is that determinants – like health and the environment, technology and innovation, and education and skills – may be important contributory factors in regional competitiveness. The TR10 İstanbul region performs strongest, followed by TR51 Ankara and TR41 Bursa, Eskişehir and Bilecik. Many eastern regions, by contrast, particularly TRC3 Mardin, Batman, Şırnak and Siirt, TRC2 Şanlıurfa and Diyarbakır and TRB2 Van, Muş, Bitlis and Hakkari languish at the bottom of the rankings. In addition to the six determinants of competitiveness retained in the framework, the type and location of regions may also be relevant in explaining discrepancies, as rural regions – particularly remote ones – struggle with poor connectivity and access to markets that undermine their competitiveness. Nor do they have the density of population or economic activity that would allow businesses to benefit from so-called “agglomeration economies”.
Figure 4. A map of regional competitiveness Determinants of competitiveness 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 Regional Competitiveness in Turkey, OECD, Paris.
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These regional disparity findings are not unexpected and confirm previous work carried out with other methods, such as the Socio-Economic Development Index (SEDI) developed by the Ministry of Development (MoD) of Turkey or previous indexation efforts led by EDAM and Deloitte. They also explain why Turkey, grappling with such large regional discrepancies, is among the OECD countries taking an active interest in regional development policies and regional competitiveness – which in turn requires improved policy co-ordination.
BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 7 2. Enhancing policy co-ordination Policy environments are increasingly shaped by vertical interactions between the national and sub-national tiers of government and by the growing need to co-ordinate horizontal relationships between numerous national stakeholders such as ministries, government agencies and bodies, and private sector representatives (OECD, 2015b). Yet evidence from OECD and non-OECD countries demonstrates that there is no one- size-fits all approach and that improving vertical and horizontal co-ordination is often challenging. The report on Project Component 3, Enhancing the Co-ordination Between Central Institutions and Development Agencies: Horizontal and Vertical Co-ordination of Strategies seeks to identify the main challenges at hand and possible future developments. In Turkey, the MoD steers regional development policy and co-ordinates action at the national level between ministries like the Ministry of Economy and the Ministry of Science, Industry and Technology (MoSIT). To accelerate the development of provinces and co-ordinate the planning, programming, implementation, monitoring and evaluation of regional development projects, it set up four formal regional development administrations between 1989 and 2011. They were: • Eastern Anatolia Development Administration (DAP); • Eastern Black Sea Development Administration (DOKAP); • Konya Plains Project Regional Development Administration (KOP); • Southeastern Anatolia Development Administration (GAP). New key institutions were also created in the late 2000s. In early 2006, Law No. 5449 on the Establishment, Co-ordination and Duties of Development Agencies in Turkish NUTS II Regions came into force. By 2009, the 26 Development Agencies (DAs) were fully operational. The law assigns them three main functions – research, analysis and planning; support programmes for for-profit and not-for-profit institutions; investment promotion and support in their regions. They also take on specific capacity-building and service-delivery tasks as required. Where DAs can play a leading role is in identifying local businesses with potential and tailoring support to their needs. Support can take the form of direct grants to the private sector, grants to universities or non-profit organisations working in synergy with companies of the sector and, quite simply, analysis and planning that informs the choices of private sector agents.
2.1. Vertical co-ordination: stocktaking and challenges DAs have been tasked to draft Regional Development Plans (RDPs) that cover the period from 2014 to 2023. All RDPs have some link with key national strategies – indeed, their high-level objectives and strategies are aligned with those of national strategies. Nevertheless, the extent of specificity of the established links varies. DAs and national-level stakeholders broadly agree that a key vertical co-ordination issue between RDPs and national strategies pertains to the uncoordinated timelines for the drafting of related strategic documents. At regional workshops, the DAs also voiced their concern that some asymmetries of information between national and regional stakeholders persist, as many national strategies still do not factor in the regional dimension comprehensively. By the same token, regional actors may not always be aware of national objectives and strategies, be they current or upcoming. Overall, there is a broad consensus among national and regional stakeholders that the MoD may be well positioned to lead in horizontal and vertical co-ordination matters. An enhanced spatial dimension in national strategies is also likely to require even stronger inter-institutional co-ordination to ensure that strategies are both adequately differentiated and coherent.
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2.2. Horizontal co-ordination in Turkey: stocktaking and challenges A mapping of Turkey’s key national strategies (Figure 5) suggests a complex framework with a large number of multi-annual strategy documents that differ in size, style, content and time period covered. Three ministries lead the main national economic strategies, with line ministries taking charge of those that come within their remit. Although national strategies are generally coherent with each other, there is consensus among Turkish stakeholders that the strategic framework could be further improved. A number of serious challenges persist. They include strategy inflation (i.e. too many strategies), burdensome reporting obligations, and the fact that the ministries and other national bodies do not have many shared objectives. Moreover, the majority of national strategies state no clear links to budgets, estimated financing needs or sources of funding. A regional dimension is also absent from most national strategies.
Figure 5. National strategies and the institutions in charge of them
5 EU – IPA - Operational programs
1 Ministry of Development
10th
Competitiveness Competitiveness innovation& Human Resources Development Environment Transport Development Plan
MTPs/ Annual Programmes 2 Ministry of Science, Industry and Technology (and associated bodies)
3 Ministry of Economy
Industrial Industrial TÜBITAK: KOSGEB: KOSGEB: KOSGEB: GITES Official Incentive NSRD Strategy Strategy NSTIS Entrepreneursip SME SME 2013-15 Exports Schemes (2014-23) (2011-14) (2015-18) (2011-16) Strategy Strategy Strategy Strategy Decree (2015-18) (2011-14) (2015-18) 2023 3305/2012
Rural Development 6 Sectoral 6 Sectoral Tourism Action Plan National Strategy Strategies (Automotive Strategy for Organic Employment (2014-20) (2011-14 Strategy (2007-23) Farming Strategy and 2016-2019, (2013-16) (2014-23) Regional 2012-16) others 4 Line Ministries: Development upcoming) Ministry of Culture and Tourism; Plans Ministry of Food, Agriculture (2014-23) and Livestock, Ministry of Labour and Social Security
Source: OECD (2016), Enhancing the Co-ordination Between Turkey’s Central Institutions and Development Agencies: Horizontal and Vertical Co-ordination of Strategies, OECD, Paris.
Strengthening the regional dimension in national sector strategies The preparation of national sector strategies is one of the policy areas in which effective co-ordination between national and regional institutions is indispensable. The success of national strategies is intrinsically bound up with how they factor in regions’ unique features and tailor policies accordingly. In that respect, the report on Project Component 4, Strengthening the Spatial Dimension in Turkey’s Sector Strategies, proposes a methodology that MoSIT could use to strengthen the regional dimension in its national manufacturing strategies. The chemicals and machinery sectors were chosen as pilots.
BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 9 2. ENHANCING POLICY CO-ORDINATION
MoSIT has introduced chapters on regional development in its second generation of national sector strategy documents prepared in 2016. The chapters, though brief, seek to showcase the provinces that lead in exports, numbers of firms, and sector-specific clusters. Although this enhanced attention to the regional development of industrial sectors is to be welcomed, the third generation of MoSIT national sector strategies would benefit from an even stronger spatial dimension:
• It would give strategic direction to regional stakeholders by defining their roles and tasks and aligning central and regional institutions’ policies more closely. • Regions face different challenges and require unique action plans in line with their priorities. National sector strategies could become even more important points of reference in the development of policies tailored to regions’ strengths and needs. • Stating clear, tangible objectives by region in national sector strategies would help the strategies to meet their national objectives. National sector policies devoid of a spatial dimension are more likely to fall short when it comes to implementation. • Taking the spatial dimension into consideration would also improve monitoring and evaluation processes for better assessments of implementation. MoSIT could use the proposed 10-step methodology to draw up national sector strategies (Table 1). The 10 steps are divided into three parts: • Steps 1 to 6 examine ways to strengthen regional analyses in national sector strategies. • Steps 7 and 8 seek to improve coherence between regional- and national-level policies. • Steps 9 and 10 seek to set out clear strategic direction for regional stakeholders, including the DAs.
Table 1. A 10-step methodology for incorporating the spatial dimension in national sector strategies
A. Intensify analyses 1 Identification of the sector-specific factors behind firm location choices
2 Increased use of regional data
3 Introduction of analyses of product groups and value chains
4 Consideration of foreign direct investment and foreign enterprises
5 Examination of clusters
6 Mapping of R&D activities and regional availability of skills
B. Improve coherence 7 Alignment with other national policies
8 Alignment with regional plans and/or sector reports
C. Clarify direction 9 Validation by regional private sector stakeholders
10 Breaking down overall targets and objectives Monitor and evaluate Source: OECD (2016), Strengthening the Spatial Dimension in Turkey’s Sector Strategies, OECD, Paris.
The methodology does not claim to be a universal approach to integrating the regional dimension into national sector strategies. Against Turkey’s current economic and policy background, it seeks, rather, to offer MoSIT a new perspective. The methodology could enhance co-ordination between national government and local stakeholders, which might, in turn, lead to more advanced methodologies and frameworks for effectively incorporating the regional dimension in upcoming national strategy planning cycles.
Possible developments in co-ordination in Turkey Recent debate among Turkish policy makers has centred on the need to better harness the potential of the minister-level Supreme Regional Development Council (SRDC), chaired by the Prime Minister, and the undersecretary-level Regional Development
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Committee (RDC). Working parties made up of lower-ranking officials could be formed as genuine “technical consultation platforms” (Figure 6). If properly put in place they could provide a valuable flow of subnational input from the ground that would feed into the SRDC’s and RDC’ debates and decisions. The enhanced co-ordination framework could centre on:
• Ensuring a timeline that is coherent and adhered to; • Improving the existing ICT infrastructure for information sharing; • Reaffirming the MoD’s leading role in facilitating horizontal and vertical co‑ordination; • Enhancing the regional dimension in national strategies; • Ensuring a common nomenclature and consistent methodologies; • Effectively monitoring and evaluating national strategies and RDPs; • Streamlining the number of national sector strategies.
Figure 6. Turkey’s national strategy co-ordination framework
Strategic documents National and regional institutions Existing bodies Discussed new bodies and measures
Supreme Regional Development Council
High Planning Council Regional Development Committee
Working Parties (thematic/sectoral)
National Ministry of Development Development Plan • Strengthened role in co-ordination
National Strategies Ministries and other National Bodies
• Regional Dimension
Regional Development Regional Development Agencies / Administrations Plans • Monitoring and evaluation focus • Enhanced data sharing infrastructures • Coherent timeline methodologies Consistent nomenclature and • strategies of number Streamlined •
Source: OECD (2016), Enhancing the Co-ordination Between Turkey’s Central Institutions and Development Agencies: Horizontal and Vertical Co-ordination of Strategies, OECD, Paris.
BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 11 3. Improving analysis at the subnational level If DAs are to support local businesses as efficiently as possible, it is a prerequisite that they carry out thorough studies of local economic conditions and structures. Today, the focus and sophistication of DAs’ analyses of manufacturing sectors mirror their vision, the skills mixes of their analysts and how closely they work with local and national academic institutions and think tanks. DAs in the least developed and economically least diversified regions often conduct simple assessments of their regions’ natural resources and defining characteristics. In the more advanced regions, DAs carry out more complex quantitative analyses, using tools such as location quotients, the geographic concentration index and gravity-based models.
3.1. Possible tools and indicators DAs could use a number of tools and indicators to complement and deepen their analyses of the manufacturing sectors and build a harmonised approach that makes it possible to compare regions and store analyses in a common database. The OECD project team made a selection of approaches from OECD and international practices, factoring in the regional dimension. They can be grouped into the following areas of focus: • Economic structure and sector performance. Analyses industrial sectors at the national and regional levels to lay the foundations of further analysis. Overall activity levels, recent changes and relative sector concentrations of employment, investment and trade are considered. Possible indicators measure macro-sector composition and dynamics, sub-sector structure and performance, technological intensity, global value chain integration, and environmental impact. • Interrelations between sectors. Examines linkages between sectors and identifies those that are closely related to the key sectors in the local economy, thereby addressing a key limitation of studies narrowly focusing on one sector only. The use of input-output tables can also yield quantitative estimates of inputs to production in the region or of the potential effect of the further development of one industrial activity on employment and production in the region. • Human capital. Assesses whether and to what extent the regional labour force can successfully meet demand from different sectors. Compares skills needs by sector with educational attainment by region, using tools such as qualification mismatch analysis, skills gap analysis, and skills anticipation. • Policy objectives. Reviews current national and regional strategies to understand how policy makers determine their sectoral and regional development priorities. Such understanding in turn helps assess how well aligned and complementary policy makers’ priorities are. • Expert feedback from regional stakeholders provides a local perspective and guidance in sector analysis. Particularly important are private sector perceptions of the obstacles they face and potential policy options.
3.2. First analyses and findings The report on Project Component 2, An Introduction to the Economic Structure of Turkey’s Regions, briefly analyses Turkey’s 26 NUTS II regional economies to illustrate how to conduct structural and sectoral analysis that supports evidenced-based policy making processes in a project context of limited time and resources. To that end, it selects indicators for the five areas of focus: • Indicators for analysis of economic structure and sector performance analysis measure a sector’s weight in the regional economy, its relative size, recent trends and levels of investment. Indicators include the location quotient, which gauges whether employment in a sub-sector is more or less regionally concentrated than nationally. It also considers the average annual growth of employment in a sub-sector.
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• Analysis of interrelations between sectors uses employment multipliers, production multipliers, and qualitative assessments of sector linkages as indicators to gauge interaction between sectors, to identify closely connected at the national level, and to evaluate the effect of USD 1´s worth of final use (or production) in a particular industry on production, employment and value added in the regional economy. • Indicators in analysis of human capital provide rough indications of possible current and future skill gaps in the regions. They measure levels of educational attainment in the workforce by sector and by region and the number of companies citing the lack of adequately educated workers as an obstacle in the Business Environment and Enterprise Performance Survey (BEEPS) in 2014 (EBRD/World Bank). • The OECD project team’s review of policy objectives sought to understand what Turkish policy makers consider their sectoral and regional development priorities. Reviews were qualitative and carried out at national, sub-sectoral and regional levels and through regional workshops. • Private sector feedback was collected from 24 expert group meetings for all 26 regions between winter 2015 and spring 2016. Each meeting was attended by an average of 30 participants from DAs, investment support offices, local chambers of commerce, the private sector and academia. The OECD project team built on the tools and indicators to draw up 26 short regional profiles using the same methodology and data sources.4 The profiles paint succinct pictures of the manufacturing sub-sectors (and services sub-sectors for some indicators) in each region and whether they can be characterised as either “dominant” or “dynamic”.5 Three regional profiles give an idea of the range of socio-economic situations to be found across Turkey: 1. TR10 – Istanbul. The region is economically diverse. It has two dominant sub-sectors and a large number of dynamic ones that have experienced strong growth in the last five years – e.g. equipment, pharmaceutical products, and repair and installation of machinery. However, despite the region’s industrial potential, its RDP focuses on creativity and services, reflecting a will to move towards a high-value services economy. With 25.8%, the region has the second-highest share of the labour force educated to the tertiary level. 2. TR72 – Kayseri, Yozgat and Sivas. Manufacturing in the region is dominated by five sub-sectors – furniture, food products, fabricated metals products, textiles, and land transport and transport via pipelines. A number of sub-sectors are also found to be “emerging”. The region has the sixth-highest share of the labour force educated to the tertiary level. 3. TRC3 – Batman, Mardin, Şırnak and Siirt. The region has few sectors that can be considered dominant or dynamic. Only the sub-sector, other non-mineral metallic products, can be categorised as dominant, while repair and installation of machinery is more heavily concentrated in the region than the national average. Region TRC3 also has the eighteenth-highest share of tertiary-educated workers, which, combined with the effects of internal migration outflows, points to potential difficulties in the development of a number of sectors. Further, more indepth analysis based on additional indicators would paint more detailed pictures of regions’ defining features. Cross-regional comparative studies also require determining a range of factors not captured by analysis of productive structure – e.g. endowments, where regions differ widely in location, natural resources and infrastructure. Another factor that this first productive structure analysis did not consider is the agglomeration of industries, research institutions or historical economic specialisations. Agglomeration or clustering effects are difficult but essential to assess.
BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 13 3. IMPROVING ANALYSIS AT THE SUBNATIONAL LEVEL
Conclusions Clear, coherent and well co-ordinated national and regional strategies that translate a whole-of-government perspective have a key role to play in boosting competitiveness. Turkey’s enhanced co-ordination framework could make further strides by i) ensuring a timeline that is coherent and adhered to; ii) improving the existing ICT infrastructure for information sharing; iii) reaffirming the Ministry of Development’s leading role in facilitating horizontal and vertical co-ordination; iv) enhancing the regional dimension in national strategies; v) ensuring a common nomenclature and consistent methodologies; vi) effectively monitoring and evaluating national strategies and RDPs; and vii) streamlining the number of national sector strategies.
The Regional Development Plans drafted by Development Agencies are evidence of a paradigm shift in Turkey towards a greater focus on increasing regional competitiveness. Evidence-based, harmonised analyses of local economic activity are pre-requisites for such rigorous bottom-up regional development policies. In that regard, more can be done to gather and provide local economic data. The lack of regional data is most pronounced when it comes to measuring regional economic activity, SMEs and entrepreneurship, and innovation. With no data on the regions’ GDP, the standard indicator for measuring economic performance is missing. The scarcity of data on sectors’ value added, the business environment or R&D activity also restricts analyses of regional performance. By addressing these shortcomings, the analysis of regional performance in Turkey could become an even stronger foundation for the evidence-driven development of policies at the sub-national level. Implementing regional development policies is a learning process, which requires flexibility and constant adjustment in the event of economic changes or shocks. Instead of following a centrally managed approach, testing policies in different regions can help evaluate what works best and revise policy choices accordingly. Involving stakeholders and representatives from the private sector can also bring benefits, as collaboration creates value, not only for stakeholders, who benefit from additional information, transparency, and accountability, but also for the public authorities who are able to garner support and innovative solutions for their projects. In that respect, regional policy in Turkey – with greater transparency, enhanced co-ordination, streamlined strategies, and more reliable data – could align more closely with the standards and objectives of the EU’s Cohesion Policy and embrace the principles of cohesion, solidarity and subsidiarity.
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1. The NUTS (from the French “Nomenclature des unités territoriales statistiques”) is a geographic administrative standard developed by the European Union. It is subdivided into NUTS I (country or region), NUTS II (region or subregion), and NUTS III levels (provinces, départements, etc.). Subdivisions may not match national nomenclatures. The OECD has also developed its own standards, in which “Territorial Level 2” (TL 2) corresponds to NUTS II. 2. Anatolian Tiger regions, as identified in OECD surveys include five NUTS II regions: TR32 (Aydin, Denizli and Mugla); TR52 (Konya and Karaman); TR63 (Hatay, Kahramanmaras and Osmaniye); TR72 (Kayseri, Sivas and Yozgat); TRC1 (Gaziantep, Adiyaman and Kilis) (OECD, 2014). 3. Turkey’s 26 regions are defined as such by Level 2 of the Nomenclature of Territorial Units for Statistics (NUTS II). The 26 regions cover a total of 81 NUTS 3 provinces. 4. See the full profiles in OECD (2016), An Introduction to the Economic Structure of Turkey’s Regions, OECD, Paris. Not all sectors and sub-sectors have been covered in the analysis, particularly agriculture. 5. The “dominant” sub-sectors account for large shares of regional employment and are more regionally concentrated than the national average. Service sub-sectors are included in the analysis of “dominant” sub-sectors because they can be an important feature of the general economic structure, which in turn shapes the landscape for manufacturing sub-sectors. “Dynamic” sub-sectors have positive attributes (like regional concentration that is greater than the national average and faster increase thereof) which may translate into future growth.
References
Full reports from the project Boosting Regional Competitiveness in Turkey
OECD (2016), Assessing Regional Competitiveness in Turkey, OECD, Paris. OECD (2016), An Introduction to the Economic Structure of Turkey’s Regions, OECD, Paris. OECD (2016), Enhancing the co-ordination between Turkey’s central institutions and development agencies: horizontal and vertical co-ordination of strategies, OECD, Paris. OECD (2016), Strengthening the Spatial Dimension in Turkey’s Sector Strategies, OECD, Paris.
Other publications
EBRD/World Bank (2014), “BEEPS V”, available at: http://ebrd-beeps.com/. OECD (2013), OECD Regions at a Glance 2013, OECD Publishing, Paris. OECD (2014), OECD Economic Survey of Turkey, OECD Publishing, Paris. OECD (2016), OECD Economic Survey of Turkey, OECD Publishing, Paris. OECD (2015a), “Regional Competitiveness”, website, available at: www.oecd.org/gov/regional- policy/regionalcompetitiveness.htm. (accessed 12 July 2016). OECD (2015b), The Governance of Inclusive Growth, Policy Shaping and Policy Making, OECD Publishing, Paris. https://www.oecd.org/governance/ministerial/the-governance-of-inclusive-growth.pdf
BOOSTING REGIONAL COMPETITIVENESS IN TURKEY: HIGHLIGHTS © OECD 2016 15 BOOSTING REGIONAL COMPETITIVENESS IN TURKEY Boosting Regional
Regions play an increasingly important role in OECD economies. They are responsible Competitiveness for delivering policies that directly affect citizens’ lives and the business environment. 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 Development and other relevant Turkish institutions more effective. The 22-month project was implemented by the OECD in close collaboration with the Ministry of Development of Turkey and co-financed by the European Union and Turkey.
Project findings are examined in four thematic reports. This summary of the main points of the four reports seeks to paint a coherent picture of key findings in a single easy-to-read document.
This project is co-financed by the European Union and the Republic of Turkey
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