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 Why
does everybody regard Gaziantep entrepreneurs as cunning? Why is Gaziantep a possible
model for the economic and social development of southeastern Anatolia? These questions
are engendered by an important trend in Turkey. In recent years, an increasing number
of medium-sized towns have been showing rapid economic development and population
increase. Gaziantep, together with towns like Denizli, Kayseri, Konya, and Manisa,
is probably the best example of this trend. These second rank cities, following large
metropolitan towns, are the engines of growth in their region. While the regional
and rural-urban disparities remain, this growth shows that the major social and economic
restructuring of Turkey will be achieved through diffused industrialization. The
social, cultural and political implications of this process are also crucial and
deserve particular attention .
How can we explain
Gaziantep's economic success and what about its weaknesses? The well-known and admired
economic success of Gaziantep is entirely based on indigenous entrepreneurship, local
solidarity and pride, and small and medium-sized businesses. Small and medium-sized
cities and medium-sized firms provide the key to reduce regional disparities, to
control rapid migration, and to integrate into the European economy. But they also
have serious weaknesses which may undermine their achievements in the long term.
There are especially
large economic risks for Turkish cities and businesses in the Customs Union. The
main challenges are technology and manpower. We live under the threat of catastrophic
marginalization of the Turkish small and medium-sized enterprises [SMEs] and medium-sized
towns in the process of integration and regional competition in the coming years.
Competitive and innovative businesses of the advanced economies of western Europe
might easily invade and dominate semi-peripheral regions like Gaziantep.
Consequently, both
SMEs and medium-sized cities need a new orientation for a prosperous future within
Europe. The challenge of upgrading its technology and human resources for competition
will determine the place of Gaziantep's economy and social life in an integrated
Europe open to global competition. If Gaziantep does not succeed, it will simply
become a lost peripheral region of a more diversified and competitive world of trade.
The alternative path is a more integrated and competitive role that the local economy
will play in European and Middle Eastern markets.
Gaziantep's economic history
Gaziantep's economic
development has been based upon local resources and craftsmanship traditions rather
than direct government investments and incentives. At the end of the 19th century
Gaziantep had a large population of 81,040 and diversified economic activities. According
to the Ottoman census classification, 65,398 were Muslims and the rest were Armenian
(11,610), Jewish and Coptic. As part of the Aleppo Province, Gaziantep (Ayintab as
it was called then) was an important centre on trade routes. Its economy was based
on strong agriculture, commerce and manufacturing. Vineyards and pistachio plantations
were two sources of especially valuable agricultural products. Tanning, cotton and
silk weaving, alcoholic beverages and soap were the main manufacturing activities.
There were almost four thousand looms in the city by the end of the 19th century.
As the multi-religious and ethnic structure of the Ottoman Empire gave way to nation
states, minorities left Gaziantep. This caused a shortage of skilled people and led
to an economic decline in the city during the early years of the Republic.
The city's economy
greatly benefited from state incentives for industry before the second world war.
The weaving industry developed in the 1930s and processing of agricultural products
in the 1940s. During the 1950s and 1960s, Gaziantep did not get direct state investment,
except for a cement factory that started production in 1961. However, small and large
private sector firms began to grow in this period. The construction of the Birecik
Bridge in 1956, which connected the city with Urfa and reduced transportation costs,
opened the eastern and middle Anatolian markets. Motor vehicles and mechanized agriculture
increased the need for machinery parts production and repairing. In the following
decades, Gaziantep became a small-scale industrial centre of the Southeast in the
repair and small scale production of vehicle and agricultural machinery parts.
Commercial activities
have historically been very important for the city economy. In the 1960s and 1970s
a new dimension was added to this and Gaziantep became a major centre of contraband
trade for the whole country. This certainly contributed to the city's economic growth
and capital accumulation. But after the trade liberalization of the 1980s, this business
lost its importance.
Sectoral development and trade
 Based on its share of business establishments in the national total,
Gaziantep's economy is amongst the leading provinces in Turkey. The top five cities
are İstanbul with 20.3% of businesses, Izmir (7.0%), Ankara (6.7%), Bursa (3.9%),
and Adana (3.6%). They are followed by the second rank cities: Konya (3.0%), Içel
(2.7%), Gaziantep (2.6%), Manisa (2.2%), Kayseri (1.6%) and Denizli (1.5%). Although
this distribution indicates the emergence of new economic centres in the country,
it also shows the prevailing disparities among regions and cities. Over the past
ten years, for instance, İstanbul increased its share in the number of business establishments
and in Turkey's gross domestic product at the expense of rural areas and small towns.
Gaziantep has a better
developed small firms sector and economic activities than its neighbouring provinces.
This creates a market superiority over its hinterland as many backward towns and
villages are dependent upon outside sources of goods and services. The economic hinterland
of Gaziantep includes parts of the neighbouring provinces and it reaches the markets
of the 13 eastern provinces. The province of Gaziantep is considered the "pole of
growth" of the Southeastern Anatolia Project (Güneydoğu Anadolu Projesi-GAP),
since it contributes 40% of total manufacturing in this region.
There are over 27,700
small firms in the city employing 60-80,000 people, including unregistered workers.
This is a much higher figure than that of larger companies in the province. Therefore,
employment creation by the small firms is crucial for the local economy.
These firms also create
income for family members and relatives in the social network. The data presented
in Table 1 show that most firms are concentrated in the retail and wholesale trade
(60.3%) and manufacturing (21.1%). One of the biggest problems for these businesses
is the limited capacity for growth, since firms are very small (1-9 employees). They
often rely on unpaid family employment and unskilled rural migrants. Especially in
manufacturing, the number of small establishments is remarkably high. This is caused
more by the continuation of artisanal traditions than by the presence of lean, innovative
businesses. These firms employ child and teenage male labor who are obviously unskilled
and often not registered with the social security institutions.
Indigeneous entrepreneurship
 Entrepreneurship is a search for opportunities and wealth in order to
utilize capital and/or skill in the local market and it is not linked to unemployment
or redundancy. According to my survey results, there are different motives behind
the entrepreneur's decision to start up a business in Gaziantep. The most common
motives are family influence (24.1%), previous work experience (19%) and a search
for independence and profit seeking (18%). These are followed by the desire for personal
satisfaction and enjoyment, easy and comfortable daily routine (particularly in commercial
sectors) and a less competitive atmosphere.
All small firms need
a certain amount of start-up capital and/or previous involvement and local contacts
in order to survive. There are two important influences for entrepreneurs in this
context. First, family and friends are crucial to maintain a business tradition.
They provide financial support, cheap or free family labour, business experience
and a good social environment for the entrepreneur. Second, the cultural experience
of business involvement as an apprentice is very important. This serves as a force
of socialization of young males into skills and economic activities.
As the firm grows and
expands the business dynamics and support networks change. But one characteristic
still remains important. That is the involvement and help of family and friends in
the home town. Perhaps the most important factor for the success of Gaziantep is
the strong sense of local identity among small and large businessmen. Therefore,
growing businesses remain in the city rather than moving elsewhere. This sets Gaziantep's
business culture apart from that of similar towns. Today some of these large firms
are not just influential in their region but also control the Turkish market.
The entrepreneurs'
expectations of and initial inspirations for their business are based on concerns
about their own and their families' wealth and living standards. The respectability
of a profitable business is also an aspiration in the community where families know
each other and reputations are important.
Small and medium-sized businesses
 The average number of workers employed
by Gaziantep's SMEs varies from sector to sector. It is highest in food, textile,
leather, wood, paper, metal and non-metal products and lowest in basic metal and
chemical product industries. Small firms concentrate in the traditional sectors.
Technological improvements and industrial research and development are quite poor
in most industries.
The size of small businesses
in different sectors is closely related to the size of the local and regional markets.
For example, the construction sector developed along with urbanization and increasing
family income. Similarly, food processing and textile industries flourished due to
regional demand in southeastern Turkey as well as in the Middle East. Gaziantep's
trade links with the Middle East are especially strong as 76.3% its exports go to
Middle Eastern countries. This is followed by African (9.2%) and Asian countries
(5.4%).
Bottlenecks for local business
In flexible specialization,
small firms reach economies of scale through networking by taking advantage of a
wide range of choices for supplies or services. The stable business contracts and
sub-contracting relations help small businesses to develop their skills and products.
Small firms gain control of production, design and marketing through specialization
and modern technologies. Large companies also benefit from this process as they externalize
risks. However, small and large firms in Gaziantep and in Turkey as a whole have
quasi-networks with weak cooperation and temporary business relations.
There are three main
problems with small firm growth. First, imitation rather than innovation shapes business
practices. Second, lack of trust among business people and limited strategic vision
create short-sighted relations. Third, instability in the national economy adversely
affects business prospects. These impede long term stable business relations, economic
growth and technological investments.
Imitation versus Innovation
Most Gaziantep firms
do not innovate but diffuse and alter technology through widespread imitation. Certainly,
there is a possibility to move from imitation to innovation in these firms, but present
practices show that this is unlikely. Gaziantep firms play an important role in introducing
and digesting new product or business techniques into the local markets and they
spread into other small and medium-sized firms. Food processing and packaging, textiles,
and cottage industries in medium-sized towns have particularly benefited from this
indigenous production.
These characteristics
are similar to countries in Southern Europe such as Portugal, Spain, and Greece.
Small businesses in these countries typically imitate new products and business practices.
This practice diminishes profit levels and leads to increasing competition as the
number of small firms in a particular trade or production area increases and saturates
the market.
Yet, imitation in manufacturing
is crucial for the artisanal development of entrepreneurs. Entrepreneurs who were
ex-employees and apprentices develop their skills and knowledge of machines through
repairing and imitation. The problem for these small machinery manufacturers is the
widening gap between the capabilities of what they produce and the best new designs.
Trust and Vision
Small firms in Gaziantep
are very vulnerable to macro economic changes and government policies. Most such
firms have complex trade relations with big and small businesses. This makes them
susceptible to any fluctuations in the business environment including bottlenecks
in their supply lines. These vulnerabilities mean that personal and business trust
between entrepreneurs is crucial for deals and agreements. However, neither partnerships
nor business relations last long, due to mutual mistrust and corruption in the local
economy. Even among family members and relatives, managerial difficulties and profit
distribution cause serious disputes and even lead to a break up in relations. Fake
bonuses and cheques and unexpected business failures affect local firms in an economic
sense but further diminish trust and confidence among businessmen. This in turn reduces
the chances of network relations and partnerships among firms.
Another barrier to
growth is related to the attitudes of the entrepreneurs. Many entrepreneurs learn
the business in practice but lack managerial skills and education. Small business
owners and families want to keep control of the key decision- making and financial
aspects of the business. Therefore, they do not want to expand the business. There
is also some evidence that businessmen do not always make investments to improve
the current business and they hesitate to hire qualified engineers, accountants and
marketing agents. There are speculative investments and conspicuous consumption by
the entrepreneurs and their families. Small businessmen are stimulated by a wealth
seeking impulse, and not by investment in innovative and growing business. Generally,
entrepreneurs in all sectors want to secure their capital and seek more profitable
areas by diversifying their activities.
Prospects
 Rapidly
changing government policies, inefficient bureaucracy and high inflation rates adversely
effect the business environment in Gaziantep. Survival is a day-to-day challenge
for local businesses. Many entrepreneurs have little trust in government and state
institutions, so they largely rely on their credibility in local markets. Financial
burdens are backbreaking as interest rates are prohibitive. Since unpaid debt can
ruin reputations entrepreneurs are reluctant to take big loans or commit resources
to ambitious business projects.
Yet, so far Gaziantep
has been successful in organizing itself for its economic development. Businessmen
are willing to invest and are actively putting pressure on the central government
to improve their business environment. To offset the debilitating impact of the economic
embargo against Iraq, the city businesses have been looking for new markets. Chambers
of Industry and Commerce demand that Gaziantep be considered the leading city in
the GAP project. They lobby for a free trade zone, and want to develop better links
with European markets. Gaziantep also seeks a new role in the Middle East, historically
its economic lifeline.
The number of organized
work sites in the city has been increasing in recent years. The Gaziantep Organized
Industrial Zone was established in 1969 and experienced rapid growth. In 1995, 116
firms were operating there and employing around 20.000 workers. Another rather recent
development is the aggregated business and trade centres in the city. GATEM (Gaziantep
Industrial Center) incorporates 15 different business groups and over 1900 individual
companies. YASEM (Construction Industry Center) is a project to host construction
companies. Similar sites developed by medical doctors and other professionals are
proliferating. This type of business aggregation helps the development of business
standards and facilitates the use of information in the local market. It is also
a sign of the organizing capacity of the city.
The future of local
economies and communities lies in their capacity to organize themselves. In a more
competitive world where the power and patronage of central governments are diminishing,
cities and regions have to learn to act in their own interests and to catch up with
technological and business changes. Turkey is no exception in this process and it
is increasingly important to make the necessary changes for a more decentralized
local governance structure and to support indigenous development in rural areas and
towns in the country. This is not an easy process and there are no ready made recipes.
Civic awareness about local matters and the organized participation of businesses
are essential for future prosperity. Lack of new technologies, poor business services,
weak business integration, macro economic problems, lack of managerial skills and
qualified manpower, problems of business ethics are major bottle-necks. There are
other problems as well that are largely related to fast urban growth, insufficient
urban infrastructure, and environmental degradation.
Gaziantep has the opportunity
as well as the potential to make this change. The city economy has to be diverted
to the benefit of its citizens. The partnership for the future will focus on improving
human resources, increasing business capacity and competence. But this process is
strongly linked to the future opportunities and prospects for development nationwide.
First, how the economic
policies, distribution of resources, power of local governments will evolve in the
near future is a critical question for any local initiative in Turkey. Second, how
the GAP project will help overcome economic backwardness and whether the clashes
in the southeast will end soon remain crucial questions for stable growth in Gaziantep.
Third, what kind of economic opportunities the Middle Eastern peace process and the
Customs Union will bring to the region is also important for the international relations
and trade links of the city.
The real lifeblood
of the Turkish economy is not just the 20% which İstanbul represents. It is distributed
among the small and medium-sized towns throughout the country. We can see that the
problems and opportunities of Gaziantep and other second rank cities show the real
direction and potential of the Turkish economy. The cities face a challenge. They
will either be active members of the integrated European market or be marginalized.
If these cities fail and do not realize their potential, they will be relegated to
the lost periphery of Europe.
Dr. Gül Berna Özcan
Department of City and Regional Planning,
Middle East Technical University
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