OECD praises Turkey’s ‘resilient’ business sector but calls for reforms

By on 19/07/2016 | Updated on 24/09/2020

The OECD has praised Turkey’s business sector for demonstrating “extraordinary resilience” during the current political unrest in the country, but also called for the government to implement a number of policies in order to rebalance the economy by strengthening the manufacturing sector.

Presenting the OECD’s economic survey of Turkey last week, the organisation’s secretary-general Angel Gurría said: “Turkey has had to cope with difficult times, but there is a silver lining amidst the volatility.”

“The Turkish business sector is demonstrating its extraordinary resilience and outstanding versatility, re-orienting exports to promising markets and vigorously seizing new opportunities.”

But, he added: “The challenge going forward will be to re-balance the economy, away from an over-reliance on private consumption to more export-oriented sustainable growth.”

The survey calls on Turkey to “strengthen the rule of law, judiciary independence and the fight against corruption; reduce barriers to foreign direct investment; enhance the flexibility of employment rules for all firms and avoid tax thresholds for larger and higher productivity firms; focus upskilling programmes for small entrepreneurs on basic management, foreign languages and digitalisation; and  consider creating a productivity council with a broad mandate to assess all relevant structural and policy drivers of productivity growth in Turkey and to issue policy recommendations.”

Other reforms Turkey should consider, according to the report, include introducing a “zero cost licencing” initiative for start-ups; carrying out an “in-depth review of the tax system to reduce the cost of formalisation and rationalise the tax incentives to R&D, innovation, business angels, industry-university co-operation and other productivity-enhancing investments;” and publishing “regularly the impact assessment studies of publicly funded R&D and innovation support programmes.”

The survey also encourages Turkey to continue pursuing prudent macroeconomic policies aimed at bringing down inflation, increasing domestic savings, improving women’s participation in the labour force and boosting foreign direct investment.

The survey predicts that growth will remain strong – at around 4 percent in 2016 – despite headwinds from the conflicts raging across Turkey’s southern border, domestic tensions in the eastern regions of the country, trade restrictions which prevailed with Russia until July, and the inflow of millions of refugees.


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About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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