economic development in yemen: is there a role for turkey? · economic development in yemen: is...

tepavEconomic Policy Research Foundation of Turkey

Economic Development in Yemen: Is there a role for Turkey?

Güven Sak, 11 January 2011

Outline

Turkish economy and its transformation

Turkish – Yemeni economic relations

Where to go from here? Trade diversification: wealth follows trade

Private sector development and capacity building

A pilot industrial zone project in Hodeidah

Turkish-Yemeni Economic Relations

An overview of the recent progress of Turkish economy

1980 2001 2008

GDP (billion $) 70 509 700

Per capita GDP (USD) 1,500 2,906 9,000

Number of enterprises 90,000 723,503 1,170,248

Exports (USD billion) 3 31 132

Exports per worker (USD) 65 1,456 6,229

Industry share in exports 10% 92% 92%

Number of exporters 1,000 25,000 47,000

Tourism revenue (billion $) 0,3 8 21Ranking in the world (in

terms of GDP) 25th 21st 17th


Source: WDI, EIU, TÜİK, SSK, TİM

Rapid growth in manufacturing after mid-90’s

Export indicators of the countries in the region (1996)

Country’s share in total manufacturing exports of the region (%)

Share of manufacturing in Country’s total exports (%)

AlbaniaArmenia

Bahrain

Bulgaria CroatiaEgypt

Greece

IranKuwait

Israel

Jordan

Kazakhstan

Jordan Kyrgyzstan

Malta

Morocco

Oman

Syria Moldova

Romania

Russia

Saudi Arabia

Macedonia

Tunisia

Turkey

UAE

0%

5%

10%

15%

20%

25%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Today Turkey is the largest manufacturer in the region

Export indicators of the countries in the region (2008)

Country’s share in total manufacturing exports of the region (%)

Share of manufacturing in Country’s total exports (%)

AlbaniaArmeniaAzerbaijan

Bulgaria

Croatia

Egypt

Georgia

Greece

Iraq

Israel

Jordan

Kazakhstan

MaltaMoldova

Romania

Russia

SerbiaSyria

Tunisia

Turkey

UAE

Yemen

0%

5%

10%

15%

20%

25%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Geographic diversification in Turkey’s exports

54% 56% 56%48% 44%

11% 7% 10%

12%12%

11%9%

14%19%

19%

4%4%

4% 4% 8%7%

12%4% 4% 3%

12% 12% 12% 13% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 2000 2007 2008 2009

Other

North America

North Africa

Near and Middle East

Non-EU Europe

EU-27


Turkish-Yemeni trade has dramatically increased, but is characterized by a large imbalance

0

50

100

150

200

250

300

350

400

Turkey's Total Exports to Yemen (mn USD)

Turkey's Total Imports from Yemen (mn USD)

Source: UN Comtrade

Turkey’s exports from and imports to Yemen, 2000 – 2009, million USD


Turkey currently is not a critical trade partner for Yemen

Rank Country% Total Exports

1 China 25.2

2 India 20.1

3 Thailand 18.3

4 Singapore 6.9

5 South Africa 6.2

6 United Arab Emirates 5.7

7 Japan 5.4

8 Saudi Arabia 2.6

9 Kuwait 1.5

10 Somalia 0.6

SHARE OF FIRST 10 95.0

49 Turkey 0.01

Rank Country % Total Exports

1 United Arab Emirates 9.9

2 China 9.3

3 USA 6.4

4 Japan 5.6

5 Saudi Arabia 5

6 Switzerland 4.6

7 Kuwait 4.3

8 Turkey 3.9

9 Brazil 3.8

10 India 3.7

Source: UN Comtrade

Yemen’s export partners (2009) Yemen’s import partners (2009)


0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009

Manufacturing

Agriculture & Mining

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009

Manufacturing

Agriculture & Mining

Yemen Turkey

Turkey Yemen

There is a structural difference in the pattern of trade flows

Source: UN Comtrade


Trade in both directions is dominated by traditional products

Top 10 Items (2009) USD

Live trees, plants, bulbs, roots, cut flowers etc 289,021,211

Bird skin, feathers, artificial flowers, human hair 274,363,567

Dairy products, eggs, honey 27,436,630

Paper & paperboard, articles of pulp, paper and board 25,218,081

Edible vegetables and certain roots 20,996,606

Articles of iron or steel 9,476,532

Headgear and parts 7,893,507

Electric machinery, apparatus and appliances 6,729,276

Products of animal origin 6,098,593

Coffee, tea, mate and spices 5,899,362

Top 10 Items (2009) USD

Products of animal origin 166,169

Live trees, plants, bulbs, roots, cut flowers etc 65,545

Fish, crustaceans, molluscs, aquatic invertebrates 59,883

Soaps, lubricants, waxes, candles, modelling pastes 59,883

Articles of apparel, accessories, knit or crochet 36,397

Stone, plaster, cement, asbestos, mica, etc articles 29,148

Edible vegetables and certain roots and tubers 11,658

Iron and steel 7,580

Edible fruit, nuts, peel of citrus fruit, melons 6,745

Copper and articles thereof 1,795Source: UN Comtrade

Turkey Yemen Yemen Turkey



Export markets appear to be complementary

South Asia1%

Central Asia3%

South East Asia1%

East Asia3%

NA4%

MENA29%

Sub-saharan Africa3%

EU56%

Turkey

South Asia21%

Central Asia0%

South East Asia26%East Asia

32%

NA0%

MENA12%


EU2%

Yemen

Export markets (2009)

Source: UN Comtrade

Export markets are even more complementary when we exclude Europe

South Asia3%

Central Asia8%

South East Asia3%

East Asia5%

NA9%

MENA66%

Sub-saharan Africa6%Turkey

South Asia21%

Central Asia0%

South East Asia27%

East Asia32%

NA0%

MENA12%


Yemen

Export markets, excluding EU (2009)

Source: UN Comtrade


Where can we go from here?

Four major priorities in bilateral economic relations

Diversifying the trade base – increasing private sector’s export capacity

Capacity building – rule of law; conducive regulatory environment

Skills upgrading – in line with the needs of Gulf Countries?

Private sector development

A pilot project that can cater all three cross-cutting priorities: a conducive investment climate at the local level possible?

An Industrial Zone Initiative in Hodeidah

Islamic Development Bank and TOBB as strategic partners

OSTIM as an experienced developer


Yemen MENA All Countries

% of Firms Identifying Tax Administration as Major Constraint

41.73 32.70 23.49

Number of Power Outages in a Typical Month

54.39 14.34 8.92

% of Firms with Line of Credit or Loans from Financial Institutions

8.09 30.03 34.50

% of Exporter Firms 3.08 27.26 17.92

Source: Investment Climate Surveys, The World Bank

Yemen’s investment climate suffers from many issues

An special economic area with a favorable investment climate!


Hudeidah Organized Special Industrial Zone


Why Hudeidah?

Keen private sector interest and capacity

1 million population + University with 15.000 students

Logistics infrastructure

Potential to serve both the domestic market and Middle Eastern and East African countries

• (complementary to the Aden Free Zone, which targets Gulf and Asian markets)

Port (6km to Hodeidah port; 30 km to Saleef deep water port)

International airport

Road access to Saudi Arabia’s new economic city Jezan

Easy access to land

Industrial zone on a 6km coastal line

In line with government development plans

Security situation much better than other regions


What to improve?

Capacity building and training for industrial zone development and management

Off-site and on-site infrastructure development

Legal framework

Lessons learned from the 50-year Turkish experience

Form of public-private partnerships – governance structure

One-stop-shop framework

Business development services


Concluding remarks Three important binding constraints that we need

to tackle in Yemen – grand design

Regulatory framework

Infrastructure bottlenecks

Skills compatible with growing industrial interest

Why not focus on a pilot project?

Special economic zone that can tackle the constraints

Every project needs a financing mechanism

Islamic Development Bank’s interest in Yemen


economic development in yemen: is there a role for turkey? · economic development in yemen: is...

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