Industrial Policy in Turmoil: New Paper on the Turkish Garment Industry
IMEG member Dr Merve Sancak has published a new article titled "Industrial Policy in Turmoil: Sectoral Policy Undone by Macroeconomic Instability and Rising Production Costs in the Turkish Garment Industry" in the Journal of Economic Policy Reform.
The article examines why the Turkish garment industry—one of the country's most competitive export sectors and a major source of manufacturing employment—has experienced stagnation and even downgrading despite industrial policy efforts since the pandemic. It argues that sectoral industrial policy alone is insufficient to promote upgrading in non-hegemonic powers (NHPs)—countries with lower capacity to devise fully autonomous industrial policies due to their non-hegemonic position in the global political-economic configurations.
The key challenge lies in the lack of alignment between sectoral industrial policies and broader macroeconomic policies. Such misalignments stem from NHPs' position within global financial hierarchies, which restrict firms' access to credit and expose them to exchange-rate volatility, creating unpredictable production costs. The geopolitical instability, especially the invasion of the Ukraine and the subsequent rises in energy prices, as well as the Turkish government’s response to these created further pressures on garment manufacturers. At the same time, persistent price pressures within global value chains further undermine firms' capacity to upgrade, contributing instead to industrial decline.
The article is open access and available here.
This is part of a special issue co-edited by Dr Sancak titled “Bridging Comparative and International Political Economy for the Study of Industrial Policy beyond the Hegemons”. The Special Issue brings together contributions examining how non-hegemonic powers navigate the interaction between global and domestic political-economic pressures in shaping industrial policy, and the implications of this industrial policy for domestic industrial development.
