“While acknowledging the importance of economic stability, the memorandum explored how Turkey could achieve sustained growth by accelerating productivity, particularly in ‘pro-development’ sectors, capable of delivering both added value and employment,” it said.
“The analysis shows that the most productive industries and firms are not necessarily capturing the most resources.
“Apart from a handful of industries such as motor vehicles, basic metals and textiles, productivity in manufacturing has more recently stagnated,” it said.
The group said that while construction and services have expanded rapidly, they also exhibit low and falling productivity.
“In services, there is scope to expand more sophisticated industries like information and communications technologies which raise productivity in manufacturing and other sectors,” it said.
“When companies raise their productivity through added technical capacity and innovation, unproductive firms are forced to exit the market, freeing up resources for the more efficient firms, including new entrants.
“As a result, the sector expands. Capital and human resources then move into the expanding, higher productivity sectors and out of low productivity sectors – a process of structural transformation which accelerates economy-wide productivity and growth,” it said.
The group concluded that Ankara could adopt reforms to promote productivity growth in firms and allocate resources more efficiently.
“Well-targeted public incentives for innovative firms, including young enterprises, could also encourage new business lines, new technology, and more efficient processes,” it added.
Hurriyet Daily News