Italy and Turkey are predicted to have a trade volume of more than $20 billion before the end of this year. They have multiple bilateral trade agreements in place, and their goal is to reach a total of $50 billion in the next five years. Turkish investments in Italy are increasing since Italy serves as a gateway for Turkish enterprises to enter the markets of EU member countries. For Italy, Turkey is an important alternative to China because it is closer to European markets, and Turkey has one of the largest markets around the EU countries as well as a gateway to the Middle East and beyond. As a result, expanding commerce between Italy and Turkey may have positive outcomes in trade for both countries.
Two National Economies in Crisis
The Italian economy and the Turkish economy are still suffering from the financial crisis. Italy has lost a large production capacity to China after the global financial crisis because the cost of production in Italy is higher than the cost in China. Many foreign investors prefer China because of the relatively lower cost of production, despite the fact that China is geographically distant from the EU member countries.
Italy is therefore looking for new investors and a place close to the EU member countries to produce. The Turkish economy, on the other hand, is in a deep recession with rising inflation. Foreign investors found Turkey to be extremely dangerous as political decisions, including those of the Turkish Central Bank, began to shape the Turkish economy. Turkey thus has a strong desire to attract any type of investment in order to give itself time to assess its condition and make recovery plans.
Common Points between Italy and Turkey
In terms of economic development, Italy and Turkey share a common past. Both countries began their economic development with textile businesses, and both lost their textile trade advantages to China. Furthermore, the textile industries in Italy and Turkey have a strong relationship. Italian textile producers taught and shared production processes and know-how to Turkish textile producers while Turkish manufacturers bought machinery from Italy. Before the 2000s, Italy was trying to strengthen its industrial production, with the goal of creating products with a higher added value than textiles. While transforming the textile industry, Italian textile manufacturers learned that Turkish textile producers wished to replace Italy in the low-technology textile products industry. The Italian producers took advantage of this situation, and they were able to sell their second hand machinery to Turkish producers. Turkish producers were responsible for creating textile products that required relatively less developed production processes until China took over the market in the late 2000s. As a result, Turkey and Italy have a long history of trading and manufacturing collaboration.
Both countries need funds and investments in their countries. Their national economic dynamics cannot sustain a stable development path. Therefore, they need to attract foreign investors and partners in trade and production. Italy and Turkey can provide certain advantages to each other mutually. In other words, Italian producers can build a production plant in Turkey, reap significant benefits in trade and production, and vice versa. Considering that both countries are in trouble these days, cooperating can produce fruitful results in trade.
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