Public Policies and Incentives for Smart Manufacturing in Turkey

Public Policies and Incentives for Smart Manufacturing in Turkey Dr. Sinan Tandoğan Head of Entrepreneurship Support, TUBITAK sinan.tandogan@tubitak.gov.tr Industrial Technologies 2016, Amsterdam 22.06.16

Turkey: 1990-2013 Indicator 1990 2000 2013 GDP ($ Billion) 151 267 823 GNI per capita (current US$ Thousand) 2.3 4.2 11 Value added in agriculture (% of GDP) 18 11 8 Value added in industry (% of GDP) 32 31 27 Value added in services (% of GDP) 50 57 65 Exports of goods and services (% of GDP) 13 20 26 Foreign direct investment, net inflows ($ Billion) 0.7 1 12,5 Mobile cellular subscriptions (per 100 people) 0.1 26 93 Individuals using the Internet (% of population) 0 4 46 OECD, 2016

Public Support/BERD in Turkey: 1996-2011 25,00% 20,00% R&D Tax Incentives/BERD Direct R&D Support/BERD 15,00% 10,00% 5,00% 0,00% Tandogan, 2013 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2023 R&D Targets

Turkey s Strengths for the Next Steps Significant progress with the development of key industries and growing trade and investment Rapid export growth in the last decade Strong banking sector thanks to structural reforms after 2001 economic crisis Well developed and large domestic market Generous public incentives, aimed to increase private RDI, export share of high-tech industries, as well as to improve research commercialization and entrepreneurship

Turkey s Challenges Need for higher skilled labor force Premature de-industrialization risk Low export share of high-tech products

National Policy Documents Tenth Development Plan (2014-2018), National Science, Technology, and Innovation Strategy (2011-2016), Industrial Policy Strategy (2015-2018) Decrees of Supreme Council of Science and Technology (SCST) They all underscore the need for strengthening competition and industrial productivity to enhance medium-high tech. exports.

Policy Measures in Tenth Development Plan The Tenth Development Plan (2014-2018) identifies four strategic pillars: 1. qualified people, strong society; 2. innovative production, stable and high growth; 3. livable places, sustainable environment; 4. international cooperation for development.

Latest Policy Decree from SCST* Transition of Turkish industry for increasing international competitiveness in technology production: Developing an implementation and monitoring model for smart manufacturing in coordination with all stakeholders Increasing goal-oriented R&D efforts in critical and pioneering technology areas (cyber-physical systems, AI/sensor/robotics, IoT, big data, cyber security, cloud techs, etc.) Designing support mechanisms for manufacturing infrastructures to develop critical and pioneering technologies. *Supreme Council of Science and Technology, Decree 2016/101, February 2016

TUBITAK s Call Topics in I-4.0: 2016-17 Advanced Manufacturing Technologies Multilayer additive manufacturing Rapid prototyping and 3D printing technologies CAD/CAM, simulation&modelling software Robotics and mechatronics Flexible manufacturing Internet of Things Sensors and sensing systems Virtualization M2M communication Cloud computing

Initial Achievements on I-4.0

Expected Impact of I-4.0 Transformation in TR* Productivity gains of 4 to 7 percent on an annual basis. Despite the predicted low skilled job loss, 5 percent absolute increase in employment is expected. Higher-skilled labor force structure is expected to prepare a stronger know-how base for Turkey. Additional total manufacturing based growth of up to 3 percent per year 1 percent growth effect on Turkish GDP. Turkish producers are required to invest about 3 to 5 billion Euro per year over the next ten years. * Turkish Industry and Business Organisation and BCG, 2016

Recent Activities Increase I-4.0 awareness at public, private and university spheres Improve private sector s ability to transform Identify and support relevant research topics Promote an I-4.0 platform as an effective communication media for all stakeholders Increase international cooperation

Annex. Selected Measures in the Tenth Plan The policy measures to prevent Turkey s deindustrialization: The use of public infrastructure investments for promoting strategic investment involving critical technologies The use of public procurements for improving the innovation and green production capacity of domestic firms The improvement of export capacity in smart building technologies, public transportation and signalling systems The efficient use of country loan and guarantee programs for increasing the exports of capital goods Subsidizing the acquisition of foreign companies

Further Reading The Tenth Development Plan of Turkey (2014-2018), Ministry of Development, 2013 An Investment Policy Framework for Turkey, Sak and Inan, TEPAV, 2015 Industry 4.0 in Turkey as an Imperative for Global Competitiveness, BCG and TUSIAD, forthcoming 2016 Evaluating Effectiveness of Public Support to Business R&D in Turkey, Tandogan, and Pamukcu, ERF Working Paper No 593, 2011