New Economy : Definition, History, characteristics

 In a world where global supply chains face repeated shocks — from the COVID-19 pandemic to the war in Ukraine and rising tensions between China and the West — European companies are searching for closer, more reliable alternatives. This has sparked a central question: Can Turkey become the "China of Europe"?

1.Why Turkey Is a Natural Candidate

Strategic Geography: Turkey connects Europe and Asia, cutting shipping times and costs.

Customs Union with the EU: Since 1995, trade in industrial goods flows easily between Turkey and Europe.

Modern Infrastructure: Ports, roads, railways, and energy corridors are already in place.

Young and Competitive Workforce: Labor costs remain attractive compared to Eastern Europe.

Diversified Industrial Base: Strong in automotive, textiles, appliances, and defense manufacturing.

Government Incentives for FDI: Turkey actively promotes foreign investment in automotive, energy, and industrial sectors.

2.Signs of an Ongoing Shift

European companies are shortening supply chains by moving production to Turkey.

Rising automotive and electronics exports strengthen Turkey’s industrial role.

Steady inflows of FDI show investor interest despite economic volatility.

3.Key Challenges Holding Turkey Back

Economic Volatility: High inflation and a weak lira increase risks for investors.

Political Tensions: Strained relations with the EU and U.S. create uncertainty.

Technological Depth Gap: Unlike China, Turkey lacks advanced supplier networks in semiconductors, batteries, and high-tech components.

Regional Competition: Countries like Poland, Romania, and Morocco are also pitching themselves as nearshoring hubs.

4.Scenarios for the Next Decade

Baseline Scenario (Most Likely): Turkey becomes Europe’s regional manufacturing hub for mid-value industries (cars, textiles, appliances).

Positive Scenario: Economic and political reforms + investment in technology and governance elevate Turkey’s role in supply chains.

Negative Scenario: Continued inflation and instability drive investors toward alternative nearshoring destinations in Eastern Europe or North Africa.

5.Practical Recommendations

For European Companies: Conduct cost-risk analyses, use currency hedging, and build local partnerships to strengthen supply chain resilience.

For Turkish Policymakers: Modernize the EU Customs Union framework, improve transparency and governance, and stabilize macroeconomic conditions to attract long-term FDI.                                                                                                               

                                 

Turkey has the right fundamentals to complement Europe’s supply chains in select industries, but it is unlikely to fully replace China’s global manufacturing dominance. Its future role depends heavily on domestic reforms and consistent stability that can convince investors to commit long-term.

References

European Union — Trade Relations with Turkey

European Central Bank — Supply Chain Reshoring Reports

Reuters Economic Updates (2024–2025)

Why Did China’s Economy Slow Down in 2025?

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