By Selin Calik Muhasilovic
ISTANBUL (AA) – The most important structural reform countries need to escape the “middle-income trap” is to focus on industrial policies, according to an economist and expert in the success of nations.
“Industry is the core of everything,” Professor Murat Yulek, director of the Center for Industrial Policy and Development at Istanbul Commerce University, told Anadolu Agency in an interview.
“After industrialization, the service sector develops. A service sector without industry is possible but it only creates employment, not technology. Nations like Germany, Japan, China, Taiwan, and Switzerland succeed only with effective industrial policies.”
“In Turkey, the most important industries are currently defense and 4.5G [telecommunications] concept,” said Yulek, the author of last year’s “How Nations Succeed.”
“If these industries continue to develop, Turkey can take its place among the most important countries in the world as a technology developer and manufacturer of communication and will have the important opportunity to be a well-known innovation hub in the 21st century.”
– Middle-income trap
Yulek defined the middle-income trap as a situation in which a country’s growth slows after reaching middle-income levels.
“From the 1970s to the present day, we can count the number of countries which managed to escape from the middle-income trap on the fingers of one hand. South Korea and Japan are two leading countries along those lines.”
To beat the middle-income trap, Yulek emphasized the importance of the private sector supporting policies implemented by the state.
“Swedish Aircraft Industry [SAAB] is one of the biggest examples in the international private sector,” he said, referring to the aerospace and defense firm which spun off its well-known car division in 1990.
“When SAAB was a small factory, it became the industrial engine of the Swedish government and produced planes for Germany during World War II. It created the industrial revolution and an industrial capacity in their country,” he explained.
