TÜRKIYE’S NEW ROLE IN A PERIOD OF RESHAPING GLOBAL SUPPLY CHAINS

A significant portion of the rapid growth in international trade over the past 50 years has been achieved thanks to the global supply chains established between the East and West. Starting in the 1970s, a process began in which large capital flows from developed countries to Asian countries led to the opening of new production facilities. A characteristic of this period, when foreign direct investment began to spread, was the production of goods in countries where production factors were cheaper and the sale of these goods worldwide. After Japan, South Korea, and China achieved results that satisfied investors and host governments in this area, turning export-oriented production through attracting direct investment into a competitive strategy. Over time, other countries also opted for development strategies in this direction.

In the 1990s, Eastern European countries that turned to liberal economics also chose a similar path, but one that offered slightly more protection for workers and the environment. Factors such as the end of the Cold War, technological progress, and the deepening of capital markets significantly accelerated global economic growth. In parallel, but in a much more aggressive manner, foreign trade and foreign direct investment also grew.

The technological revolution seems to have begun to give Asian countries a slight edge over their Western competitors in recent years. The latest examples of this race, which we first saw signs of with 5G and which has gradually turned into tension, come from rare metals, chip production, and the defense industry. Due to a group of factors, including these, US President Trump is continuing the tariff increases he imposed against China during his first term into his second term. Moreover, this time with a more aggressive and determined stance… The disruption in supply chains was also significantly impacted by COVID-19. At the beginning of the pandemic, many imports from China were canceled due to customer hesitation, as China was the source of the virus. Many orders were also halted at source due to logistics and human resources issues in China. During this process, the Western hemisphere witnessed how critical sourcing from closer markets and allies is not only for economic activity but also for the sustainability of daily life.

In addition, the Russia-Ukraine war, the climate crisis, digitalization, increasing geopolitical uncertainties, and protectionist tendencies in trade are among the factors accelerating the transformation of global supply chains. In this process, companies and governments are shifting towards strategies that prioritize not only cost advantages but also supply security, flexibility, geopolitical alignment, and sustainability. Within the bigger picture, Türkiye stands out as a strategic candidate country in the restructuring of global supply chains due to its geographical location, production capacity, young population, openness to trade, trade agreements, and multifaceted foreign trade relations.

Türkiye enjoys a unique geographical advantage due to its location at the intersection of Europe, Asia, the Middle East, and North Africa. Its proximity to a significant portion of the world’s population and global income makes Türkiye a natural logistics hub. Its advanced port infrastructure, road and rail connections, air cargo capacity, and cordial and friendly relations with all countries in the region further reinforce this characteristic. Türkiye has a wide range of production, from automotive to textiles and ready-to-wear clothing, from white goods to defense industry, and from food to chemicals, with over 450,000 industrial enterprises. As a country capable of flexible and cost-effective production of medium-low and medium-high technology products, it is strongly integrated with European supply chains in many sectors. There has been a noticeable increase in trade volume with the US, particularly over the last 10 years. Exports to European and North American countries account for nearly twothirds of total exports.

Alongside these advantages, Türkiye also has some weaknesses. For example, with its current installed capacity, Türkiye cannot become an alternative producer to Asian countries in the supply chain within a short period (2-3 years). Second, there is a serious lack of scale in Türkiye. Although there are many industrialists, the vast majority are micro and small businesses, and it is not possible for these businesses to supply large quantities of standard products to large markets. Third, economic stability and predictability are critical to becoming a permanent hub in global supply chains, and Türkiye has provided examples to the contrary in the recent past, except for the last two years. Another critical factor is frequently changing legislation. Changes to legal regulations concerning trade life should be as broad in scope and as few in number as possible.

Türkiye’s industrial and export structure relies heavily on medium-low and medium-high technology products. In global supply chains, however, the importance of high technology, digitalization, and artificial intelligence is increasing. Therefore, it is necessary to focus more on R&D and high-tech production. In recent years, locally developed and nationally produced products in the defense industry could contribute to Türkiye’s rise to a more strategic position in global supply chains. With the right policies and a long-term vision, Türkiye can become not only a production hub in global supply chains but also a high-value-added, sustainable, and reliable regional center.