 warned in an assessment released last month.){kind=link}
Turkey is deindustrializing at a dangerous pace, with rising fragility across its industrial base that threatens to lock the country into long-term dependence on imported technology and low-value production, the Turkish Union of Engineers and Architects’ Chambers (TMMOB) warned in an assessment released last month.
The Industrial Congress 2025 Final Declaration says global industrial competition is intensifying as the United States, China and the European Union pivot toward state-directed industrial policies and domestic production mandates. Turkey, the declaration says, continues with a “market-centric, import-dependent and fragmented” model that has now become a structural crisis.
The engineers’ union says manufacturing’s share of GDP has been declining for years, with growth driven by construction, consumption and financial expansion rather than production. The result, the declaration says, is low value-added output, vulnerability to external shocks and an unproductive economic structure. It warns that Turkey has been drawn into a risky trajectory through “wrong choices and deep dependencies” during a period of global fractures.
World Bank figures show manufacturing’s share of Turkey’s GDP fell to 19.55 percent in 2023 from 22.11 percent in 2022. The US International Trade Administration put the ratio at 16.8 percent in 2024, a further steep drop.
This comes as comparable developing economies maintained strong industrial bases. Malaysia held at 22.5 percent of GDP in 2024, according to World Bank data. South Korea stood at 24.31 percent in 2023, the latest year available.
Technology dependency deepens
The declaration identifies technology dependency as a core vulnerability. It says Turkey’s exports remain dominated by low and medium-low technology products, with high-technology goods accounting for just 3 to 4 percent of exports. This structure means competitiveness is achieved through cheap labor rather than technology, productivity gains are limited and wages are suppressed. Turkey’s position in global value chains is that of “an assembler, not a designer,” the report says.
United Nations Industrial Development Organization data quantify the gap. Turkey’s high-technology exports accounted for 3.66 percent of manufactured exports in 2022, putting the country 97th globally. Malaysia ranked third at 58.28 percent. South Korea ranked ninth at 36.12 percent. Mexico, at a comparable level of development, ranked 30th at 20.53 percent — 5.6 times Turkey’s rate. More recent World Bank indicators suggest the ratio improved to around 5 percent by 2024, though the gap with peers remains wide.
The report says imports account for an average of 63 percent of high-technology goods. In the electronics sector, nearly all chips and core components are imported. Three-quarters of the sector’s export revenue returns abroad as component costs.
Turkey’s research and development spending reflects the structural gap. The Turkish Statistical Institute (TurkStat) reported R&D expenditure at 1.39 percent of GDP in 2023 and 1.46 percent in 2024, slightly above half the Organisation for Economic Co-operation and Development (OECD) average of 2.7 percent. South Korea spends 4.9 percent of GDP on research and development. China spends 2.4 percent.
Intermediate goods accounted for 69.3 percent of Turkey’s total imports in 2024, according to TurkStat foreign trade statistics. The ratio remained at similar levels throughout 2025 as the trade deficit widened 11.9 percent to $95.2 billion. The declaration says currency fluctuations translate directly into industrial crises, the current account deficit has become entrenched and long-term planning has weakened.
Manufacturing capacity utilization fell to 74.5 percent in 2025, the lowest level since the post-pandemic recovery, Central Bank Governor Fatih Karahan told investors in January 2026. The Istanbul Chamber of Industry’s purchasing managers’ index registered 48.1 in January 2026, marking the 22nd consecutive month of contraction.
Engineering workforce under pressure
The declaration says the erosion of skilled labor is among the most critical dimensions of industrial decline. A 2025 survey of 9,561 engineers and engineering students conducted by the Chamber of Mechanical Engineers found that real wages have declined, precarious employment has spread, youth unemployment among engineers has risen and brain drain is accelerating. Women engineers face gender inequality in the workplace. The report says this erodes not only social conditions but also the country’s technological capacity.
TurkStat data published in October 2025 put numbers on the outflow. Engineering, manufacturing and construction graduates emigrated at a rate of 4.4 percent. Information and communication technology graduates left at 6.7 percent, the highest rate among all fields. Electronics engineering graduates emigrated at 9.6 percent. Business engineering graduates left at 10.8 percent. Molecular biology and genetics graduates departed at 15 percent.
Privatization blamed for hollowing out industrial base
The declaration traces the roots of the crisis to the withdrawal of the state from production and planning. It says privatizations dismantled public enterprises including Seka, Sumerbank, Etibank, Petkim, Tekel, Tupras and Erdemir, weakening domestic intermediate goods production and technological accumulation. Public investment shifted to construction and infrastructure rather than manufacturing. “The state has been removed from its role as director and producer in industry,” the declaration says.
The report criticizes Turkey’s incentive regime. Tax exemptions and allowances amount to 3.9 percent of GDP, equivalent to nearly one-quarter of total tax revenue. Corporate tax losses alone totaled an estimated 450 billion Turkish lira in 2025. Public resources have flowed to construction and public-private partnership projects rather than productive manufacturing investment, the assessment says.
Defense industry grows, but spillovers limited
The declaration acknowledges growth in the defense sector but says critical components, particularly semiconductors and electronic parts, remain import-dependent. Technological gains have not spread sufficiently to civilian manufacturing. The defense industry cannot generate sustainable development without a planned, state-led framework, the report argues.
Data from the Stockholm International Peace Research Institute confirm the sector’s expansion. Five Turkish defense contractors entered SIPRI’s list of the world’s 100 largest arms producers in its December 2025 report. Aselsan ranked 47th with $3.47 billion in arms revenue. Turkish Aerospace Industries ranked 65th with $2.16 billion. Baykar ranked 73rd with $1.9 billion. Roketsan ranked 87th with $1.39 billion. The Mechanical and Chemical Industry Corporation ranked 93rd with $1.21 billion, entering the list for the first time. Combined arms revenue reached $10.1 billion, an 11 percent increase from the previous year.
Engineers’ union calls for state-led strategy
The declaration calls for abandoning the market-centric approach and adopting a planned, state-led industrial strategy. It proposes making five-year development plans binding through participation by labor unions, professional chambers, universities and cooperatives. It calls for strengthening public ownership in strategic sectors, halting privatizations and restructuring state enterprises around public benefit and technological development.
The document says university-industry-state cooperation should serve social needs rather than the interests of international conglomerates. Industrialization should create secure employment, respect ecological limits and treat the green transition as an opportunity for domestic technology production.
The declaration frames the choice in stark terms: “Turkey faces two paths — a fragile economy distanced from production, or a planned and independent industrial leap.”