Analysis of the impacts of inward processing regime on Turkish economy and foreign trade

Today's developing countries have tried to produce outward-looking trade policies by abandoning their domestic and closed economic policies, believing that the increase in exports will be directly proportional to economic growth and that the increase in exports will play an important role in economic growth. Turkey also has kept up with this conjuncture, and changed its import substitution policy. Since the 1980s Turkey viewed exports as the engine of economic growth, and started to develop incentive policies to promote export and to make this sustainable. In the 1980s, the export incentives were generally planned on monetary incentives; however, by the mid-1990s Turkey became a party to the World Trade Organization (WTO) Agreement and it joined the Customs Union (CU), and it was obliged to act in accordance with the terms of the agreement and the integration model, and therefore the direct incentives have lost their applicability. For this reason, Turkey has started to produce new programs to promote exports. One of these programs has been the Inward Processing Regime (IPR), which is aimed at ensuring the supply of quality a low-priced input which is the principal requirement of the industries. In this study, which is conducted with the aim of analyzing the impacts of the Inward Processing Regime on Turkey's Economy and Foreign Trade, we shall first try to address the concepts of export and incentive, and provide general information about the export incentives. We shall describe the export promotion measures that were implemented in Turkey in the past, and the ongoing measures. In addition, we shall try to explain in detail the practice and mechanism of the Inward Processing Regime. On the other hand, by utilizing various statistical data, graphs and figures, we shall try to analyze the regime's impact on Turkey's Economy and Foreign Trade, which is the main purpose of the study. In the study's conclusion and recommendations section, we shall try to convey recommendations aimed at making the regime run in accordance with its purpose, in order to maximize the regime's positive impacts on Turkey's Foreign Trade and therefore on Turkey's Economy.