Reshaping the Industrial Policy Framework of Turkiye: Integrating Exports at the Core of AI-Driven Development

Abstract

This study explores the evolving landscape of industrial policy amid deglobalization, protectionism, and the technological revolution driven by artificial intelligence (AI). The shift in industrial policies across the US and EU, driven by geopolitical tensions, climate change, and economic rivalry, has resulted in increased protectionist measures. The US, once an advocate of free-market principles, now implements policies like the CHIPS Act to enhance domestic manufacturing and reduce reliance on China. For developing countries like Turkiye, integrating exports into industrial policy is crucial. Despite Turkiye's significant export growth, challenges such as low R&D spending and a small share of high-tech exports persist. The article emphasizes the need for a dedicated institution, the Industrial Policy Institutes of Turkey (TEPE), to focus on innovation, competitiveness, and sustainable development. TEPE would encompass various sub-institutions dedicated to high technology, energy, defense, and digitalization. AI can play a strategic role in analyzing sectors, optimizing supply chains, and enhancing export competitiveness. By leveraging AI, Turkiye can transform its industrial policies and position itself more robustly in the global market, ensuring economic resilience and growth.