Protection and incentives in Turkish manufacturing

Turkey has made piecemeal use of protective and incentive measures and has not given sufficient attention to the interdependence of these instruments and their net effect on different market destinations and sectors. Quantification of the incidence of the system of protection and incentives in Turkish manufacturing in 1981 led to the following findings: (i) both nominal and effective protection are high and differ substantially among sectors, between public and private firms, and between domestic and export markets; (ii) tariff redundancy exists in many sectors; (iii) there is a substantial bias against the private sector; (iv) there is a heavy bias against exports in spite of generous export subsidies; (v) domestic resource cost is high in many sectors and differs substantially among them; (vi) the cost is substantially higher in the public sector; (vii) social profitability is higher in the private sector; and (viii) wide differences exist between social and private profitability among sectors and between public and private firms. These wide variations need to be narrowed, which will require restructuring in the whole incentive system, not just in import protection.