Dear friends, all paradigms built on “manufacturing” have been collapsing one by one overt the past decade; that’s because the number of value-added goods and services is increasing as a result of pre- and post-manufacturing operations.
This is a whole new type of invasion led by AI’s spot-on analyses on consumer profiles and its digital nature responding promptly and accurately to inquiries.
While merchandise trade fails to gain the desired level of momentum, e-trade and social media advertising today continues to create a global-scale interaction among between sellers and consumers, which seems to have opened the definition of GDP (calculated using “final goods and services units”) up for discussion. As there are many discussions whether economic growth rates are miscalculated because of this misdefinition, low GDP growth rates calculated using conventional methods are causing further concerns among investors, eventually leading to a constant volatility in global fund flows.
In the midst of this chaotic financial environment, Turkey could sometimes achieve an import performance volume equal to that of global while remaining below it from time to time. During the period of 2014-2018, Turkish economy faced a series of challenges in terms of international terms of trade. We should indicate that Turkey’s current foreign trade regime is among the causes underlying these problems.
While the growth model enabling, even imposing the export of intermediate goods has dominated Turkish economy from 2002 to 2014, post-2014 government measures adopted to eliminate this state of affairs have unfortunately failed to bring the desired improvement, increasing the costs of production and leaving producers/importers with no choice but to do business with the domestic manufacturers of relatively expensive and low-capacity intermediate goods. As a result, the value of Turkish imports per kilogram remains below 1.5 USD today. Obviously, this growth model, this trade regime and this incentive system will not help Turkish economy improve any further.
On the other hand, the World Trade still remains on the East-West axis. I think all those efforts and campaigns aimed to sell goods and services to China or India are nothing but a huge waste of time and energy. . Instead, Turkish Industrialists should try to keep the real added-value in Turkey by investing in South-East Asian Countries. If their ultimate aim is to create a brand, they probably won’t make it in Turkey because Turkish firms lack certain fundamental attitudes and capacities in terms of scale, organization and approach.
“Consumers rule in today’s economy…”
“Protectionism” is the biggest obstacle to World Economic Growth. The free trade agreements (FTAs) that EU and the US signed with other countries/blocs remains as a huge impediment to Turkish economy. Unfortunately, our Trade Diplomacy remains incapable of taking any action to reverse the situation in favour of Turkey. Our hands are tied because of ongoing conflicts and deteriorating relations with the United States and EU.
Negative news is that no increase is expected in the price of goods. This whole situation may cause profitability and GDP growth crises, eventually leading World Trade to enter a recession once again just like it did from 2014 to 2018.
A major impediment to an increase in prices is tough competition. Now, producers of different goods and services compete with each other. For instance, a handbag and a mobile phone can sometimes be considered competitive items, or sometimes they can complete each other. We must admit that social media is a major catalyst behind this competition.
That is why companies are now keeping track of consumer feedback on social media. Besides, they can sell their products and services online on their own or third party e-commerce websites or applications by digitising the physical shopping experience. It appears like this trend started by Global Brands is changing the foreign trade model as well. Today people prefer online shopping instead of going to physical stores because it’s a time-saver and it offers a better mechanism to compare prices and options.
The present growth model of Turkey is built on the basis of “unit-based production increase”. To create high-value added goods and services, however, we need knowledge, experience and high-quality design. We’ll see if we can make it.