Privatization and regional distribution of manufacturing in Turkey

The state owned enterprises were crucial in the early stage of industrial development in Turkey. They were producer of basic consumption goods and contributed the building the entrepreneurial understanding, and hence the development of the private sector. State owned enterprises have played key role in almost all sectors of the Turkish economy, including manufacturing sectors and various infrastructural facilities. After 1980, the radical transformation has occurred in Turkish economic policies: The reform process included not only financial liberalization and trade reforms, but also the privatization of the state owned enterprises. Initially, starting from the second half of 1980s, international organizations have advocated privatization as a “must” policy tool. The paper explores the effects of privatization on regional growth of Turkish manufacturing. The analyses are carried out at regional basis in order to detect to what extent the public sector is complement to or substitute of the private sector. The findings show that privatization has no perverse effects on the development of the manufacturing activities in the traditional and new industrial zones. However, its effects are in opposite directions in the poor regions.