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Trade War and Developing Economies: Turkey’s Situation

The economic development policies of the Turkish government aimed at improving the construction industry and logistics infrastructure have been unsuccessful, putting the country in a tough situation. The country has also been suffering from a deep economic, financial, and social crisis in recent years, and the COVID-19 pandemic has put the country at further risk.

However, the Turkish government is remaining hopeful that the ongoing trade war between the US and China would provide the country with various opportunities. To develop a better understanding of the possible gains for Turkey, it is necessary to know which direction the trade war will follow and how it will end. If the US can force China to accept the desired global trade setting according to the World Trade Organization (WTO), meaning if China will agree to follow the policies of patent rights and other rights regarding the designs and inventions of products and stop implementing killer trade policies that take advantage of low production costs, Turkey will be able to benefit. It will regain some advantages in the textile industry and other industries that were lost to the Chinese companies with relatively lower production costs. Considering that the European countries and the US are not much interested in industries like the textile industry, other countries will have the chance to enjoy more profits. Also, if China obeys the WTO’s trade policy suggestions, Turkey might even gain more shares in the African countries’ markets.

On the other hand, if China continues to resist, Turkey may attempt to improve its relationship with China. Turkey has already signed a trade agreement to develop trade relations with China in the past, and there is also the currency swap agreement from 2012 that is still in place between the two sides. Thus, attracting Chinese investments may be an important opportunity for Turkey. Moreover, for Chinese producers, increasing investments in Turkey will allow them to remain close to important markets. Including Turkey in its trade and political networks will also greatly help China’s efforts to remain a global power.

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