Motors of innovation and development

The potential of small and medium-sized enterprises to contribute to growth and development is a point that has not been lost in the case of Turkey. On the contrary, as in most other countries, SMEs are the dominant form of business organisation here, accounting for over 95% of the business population, and they play a key role in driving sustainable economic growth and job creation.

Given their huge number and large share of the workforce, the Turkish government has for many years carried out a variety of programmes and support measures for the development of these enterprises. The number and the extent of these programmes and support measures increased significantly when the EU-Turkey Customs Union came into force on 1 January 1996. As a candidate for membership of the European Union, Turkey ratified the European Charter for Small Enterprises in April 2002 and participates in the Multi-annual Programme for Enterprise and Entrepreneurship (MAP) 2001-2005.

So, we take the future of SMEs very seriously indeed. The Second OECD ministerial conference on “Promoting Entrepreneurship and Innovative SMEs in a Global Economy”, jointly organised by the Ministry of Industry and Trade and the OECD, which will take place in Istanbul on 3-5 June 2004, is evidence of the Turkish government’s strong interest and involvement in this area. It is also recognition of the lead that the OECD has taken in bringing SME issues to the attention of busy policymakers everywhere.

The conference, which will bring together participants from OECD countries and around 57 non-OECD economies as well as representatives of international organisations, will specifically focus on entrepreneurship and innovation. The first ministerial conference on SMEs was held in Bologna in 2000. Turkey actively participated in this event, and helped to secure the adoption of the Bologna Charter on SME Policies.

Considering that SMEs are very sensitive to changes in the business environment as they might be the first to be affected by political and economic developments, the Turkish Ministry of Industry and Trade established the Small and Medium Industry Development Organisation (KOSGEB) in 1973 with the aim of increasing the share of SMEs in the Turkish economy, and helping them to upgrade their structures and achieve their integration within Turkish industry more generally.

The average profile of Turkish SMEs is quite different from that of most OECD-European countries. Their average workforce and turnover are much smaller. As in most other countries, they have difficulty obtaining financing. Furthermore, the share of the agricultural sector and the level of the rural population employed in agriculture in Turkey are higher than the OECD average. However, this situation is changing fast, as urbanisation gathers pace and is now approaching the average of other developed countries.

The fundamental strategy developed for small and medium-sized enterprises in the eighth Five-Year Development Plan – the major policy document for the current period – and the policies envisaged in the National Programme for Accession to EU foresee an increase in SME efficiency, of their share in the value added and their international competitiveness.

Policies and programmes are being developed to create a more favourable investment environment for SMEs, the market-making role and areas of intervention of the state are being identified, and recommendations are being developed to define the role of the private sector to increase the effectiveness of those policies and programmes.

The main problems facing Turkish SMEs in their development and ability to improve competitiveness in world markets are as follows: first, insufficient know-how and low level of technology; second, an unfavourable financial environment; and third, insufficient training.

We have taken action to solve these problems, with a process launched in 2003. Our aim is to increase value-added, competitive power and technological level of SMEs, to carry them to international markets and to help them create their own brands. As a result of this process, the number of KOSGEB support instruments has risen from 8 before to 38. Heavy bureaucratic procedures required to apply for them have also been simplified. The amount of aid for SMEs operating in less developed regions has been increased at a rate much higher than in developed regions.

Some 12 technology development zones and techno-parks have been created to encourage university-industry co-operation. Besides, SME exchanges have been established to strengthen their financial positioning. And venture capital companies are being set up to support young entrepreneurs.

These may not be enormous initiatives taken individually, but together they make a huge difference. We look forward to sharing our lessons with colleagues and experts from around the world and to learning how our work might be improved. Given the potential of SMEs in our economies and societies, our joint efforts will be worth it.

©OECD Observer No 243, May 2004

Economic data


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