I agree that’s how we should approach incentives. One of the main drawbacks of our industrial policies is thinking that incentives offer solutions without reflecting on the problem. And after offering incentives, not bothering to check if they’d worked! “They worked, did they? How do you know?” “Because we’ve given out X amount of incentives.”
Results are measured by expenditures. Nowhere else in the world and in no other business area would you see results measured this way. If someone were to ask, “How’s business?” “Good.” “How much are you spending?” You’d think that person didn’t know what he or she was talking about.
We assume that it’s investment costs that hold back new businesses, so we keep offering incentives aimed at lowering costs. Fine, but if that’s not the problem, incentives serve no purpose; you’re just throwing money away. For example, we want to promote industrial production in Turkey’s east. Based on purchasing power there, normalized costs etc., investment should happen on its own because it’s cheap to do business there. If there’s no investment in the east, then there must be another problem. Without reflecting first on what it is, there’s no point in offering to waive energy bills, provide land, and so on. If the problem is safety, for example, you can offer all the incentives you want but people won’t choose incentives over safety. I might say this is Turkey’s economic policy problem, but actually it’s a problem common to all our policies. Our training in economics tells us that people will do what they know to be right for them. If something isn’t working, then there’s a problem. So, we must first identify the problem.
There are many places in Turkey where people don’t want to live, for example. Lots of people want to live in Istanbul. Or in Ankara. Or in Izmir. And that’s about it. So, you can’t appoint a manager to run a business or operate a production plant wherever you want in the country. Which in turn means you can’t invest there.
In many places, it’s about the lack of cultural opportunities, cinemas or theatres, but in many others it’s that there aren’t any schools people feel they can send their kids to. Now, if that’s the main reason, no incentive’s going to do the trick. That’s why we should think about “industrial policy” comprehensively. For example, our industrial policy should be linked to our urbanization policy, but we’re using an industrial policy that allocates factory land. Of course it doesn’t work.