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Fostering Innovation in Product and Process for a Better Business and Investment Climate

Frank Mermoud, Special Representative for Commercial and Business Affairs
Remarks at the American Business Forum for Turkey Conference
Istanbul, Turkey
June 13, 2008

As prepared

I would like to thank the American Business Forum for Turkey for inviting me to speak to you this morning. It is an honor and a pleasure to participate. I would also like to thank Ambassador Wilson for his discussion of innovation, its importance to strong economies, its policy prerequisites, and its obstacles and opportunities in Turkey.

I will do my best to add to this discussion by calling on my experiences in the private sector and the U.S. Department of State. In American industry and government, we believe that successful entrepreneurship relies on creativity and freedom. To invent the new, we must critically examine the old. Hence, innovation is the product of intellectual “risk-taking,” “independent thinking,” and “freedom of thought.”[1] These are the topics of my remarks this morning. I will emphasize that freedom to innovate is crucial to the success of our global economy. Then, I will assess Turkey’s progress in implementing the elements of a successful “innovative environment,” which encourages, facilitates, and protects entrepreneurship, and supports institutions devoted to research and development in science and technology.[2]

At the State Department, one of my responsibilities is to ensure that diplomatic dialogues incorporate commercial and business issues. Successful business certainly depends on diplomacy, but diplomacy also relies on successful business to foster stable politics. As advocates for business, we promote innovation, which allows all of us to grow wealthier and live better. Innovation inspires society’s progress, in everything from medicine and technology to business, but demands the collaboration of science, education, and politics.

Turkey

During my tenure in the U.S. Government, I have had the privilege of visiting Turkey on several occasions and am honored to have participated in the annual Economic Partnership Commission discussions between our two countries, which were held in Turkey last year and in Washington, DC, in April. The EPC conferences reflect Turkey’s growing commitment to promoting innovation. Companies invest in innovation if they are confident that their ideas will be protected. Therefore, the EPC outlined a program to reinforce intellectual property legislation. Even before the EPC discussions, the total number of patent applications to the Turkish Patent Institute rose from 907 in 1996 to 5,175 in 2006 (>450% increase).[3]

Support for research and development in science and technology is critical to building an innovative society. Turkey’s efforts to support science and technology do not go unnoticed. Between 2000 and 2006, GERD (gross expenditure on research and development) increased more than twice as fast as GDP.[4] 14,000 more scientific papers were published in Turkey in 2006 than in 1996 (over a 350% increase) and over 17,000 more than in 1986.[5] Turkey is now ranked 19th in terms of scientific publications.[6] Further, Turkey strives to provide the infrastructure to accommodate the growth of its science industry. For example, the Ankara Cyberpark will eventually contain “over 400 firms and more than 10,000 [. . .] employees” operating in the “software development” and “electronics” sectors.[7]

Turkey's record of strong economic growth, its increased openness to international trade and investment, and its integration into the European and global economy create new opportunities. To sustain improvements in living standards while implementing EU regulatory and environmental norms, Turkey must strive to achieve above-average levels of knowledge-intensive, job-creating growth for the next several decades despite global economic fluctuations. This demands continued commitment to innovation and the prerequisites of a knowledge economy: the rule of law, strong intellectual property protection, high-quality educational institutions, access to credit, well-developed financial markets, investment by start-up companies and SME's, and competitive telecommunications infrastructure and services. I should note that Turks constitute almost 5% of European internet users and are engaged in building a fiber optic telecommunication network with the region.[8] Additionally, Turkey boasts a burgeoning Venture Capital industry (supported by the Technology Development Foundation of Turkey) to finance its entrepreneurs.[9]

Turkey is a fast-growing, middle-income economy. Its average GDP growth rate of almost 7% per annum from 2002 through 2006 is one of the highest in the OECD. That stands in marked contrast to the severe 2001 financial crisis and deep recession Turkey suffered, its history of booms and busts, and the legacy of statist economic policies that were the hallmark of most governments since the creation of the Turkish Republic in the 1920s. While the U.S. and Turkey enjoy the cooperative opportunities of a good bilateral relationship, a strong Turkish economy can be an engine of growth and transformation for the regions of which Turkey is a hub, including the Black Sea, the Caucasus and Central Asia, and the Middle East. Innovation is a most important topic and this forum will allow us to hear from experts across a range of subjects. I encourage all of us to work together to embolden Turkey’s leadership in innovation. Thank you.



[1] Thomas L. Friedman, “The Secret of Our Sauce,” The New York Times, March 7, 2004.
[2] Ibid.
[3] http://www.tubitak.gov.tr/tubitak_content_files//english/sti/statistics/TR_STI75.pdf
[4] http://www.tubitak.gov.tr/tubitak_content_files//english/sti/statistics/TR_STI05.pdf
[5] http://www.tubitak.gov.tr/tubitak_content_files//english/sti/statistics/TR_STI60.pdf
[6] http://www.tubitak.gov.tr/tubitak_content_files//english/sti/statistics/TR_STI70.pdf
[7] http://www.unido.org/index.php?id=o27162
[8] Paul Gleger, Remarks in Email 6/9/2008.
[9] Joint Turkey and World Bank Initiative: Innovation and Competitive Workshops, Concept Note, 2/12/04


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