The Effects of Turkish Inward Processing Regime on Foreign Trade, Employment and Competitiveness [in Turkish]

This paper explores the impacts of an export promotion policy, namely the Inward Processing Regime, on Turkish trade, employment and competitiveness. Several trade indices as well as descriptive statistics are used to assess the effects of the regime for the period of 2002-2014. It is concluded that its implementation has not been effective more than the average progress in trade flows, employment and competitiveness. There is no clear evidence that Turkish exporters use the regime in order to avoid customs taxes and trade remedies. By reducing the cost of imported inputs with world prices and providing them in a timely manner, the regime places Turkish exporters on an equal footing with others in third countries. In addition, thanks to this regime Turkish businesses, in order to sell good quality products to the world, can reach raw materials, semi-manufactured products or high technology equipment that cannot be provided from the domestic market and that are necessary for an ambitious manufacturing process. Therefore, the application of Inward Processing Regime should be continued as a complementary part of the global supply chain.