Competitiveness of clothing industry in the Turkish Republic of Northern Cyprus

Abstract

ABSTRACT Rapid changes in technology, and progress in information technology are changing the competitive conditions in all sectors of economic activity. TRNC has to follow this trend like all other countries in order to be able to respond to the conditions of increased competition. TRNC, a small island economy is facing scarcity of water, limited agricultural land and very few mineral deposits and has to rely to a greater extent on exports of goods and services. The intensity of competition for TRNC will particularly be felt after a federal solution is reached and after customs union with EC. Implementation of customs union with the EC and eventual inclusion in a market without international frontiers that will cover not only the whole trade, but also services, labor, capital, which will impose threats and opportunities that have to be evaluated. Failure to adjust to the new international developments will have negative effects on growth and employment and in general on the competitiveness of the economy. So, political resolution or EC membership, beyond a competitive TRNC, will not lead to a desirable future. The technological upgrading and the improvement of the competitiveness of the economy, both domestically and internationally, are prerequisites for surviving in the international environment within which TRNC has to compete. (vi)An important finding of this study is that due to limited expansion of the labor force, improvement of productivity through more rational utilization of the existing capital assets and the importation of new and more technologically advanced investment goods is necessary. Regarding the financing of investment, domestic savings will be the main source but, attraction of foreign investments and the establishment of joint ventures for the introduction of advanced technology and the dissemination of know-how in the country as well as the new marketing techniques have to be per sued. Another important finding is that, for TRNC to be able to respond to new and more competitive conditions it is not only necessary to modernize and improve production in the clothing sector and in those sectors which face direct competition from abroad but, it is also inevitable that whole of economic activity should be upgraded. To achieve such an objective, there must be simultaneous improvement of productivity in all other sectors, including government, s emi -government and the financial sector. Low productivity in these sectors will lead to increased production costs which will hinder a more competitive sector restraining therefore their future development. Special importance has to be attached to the better utilization of human capital, advantageous geographical position of TRNC, its (vii)natural environment and its pleasant climate. The small size of a number of enterprises has to be encouraged despite they cannot mass produce and reduce costs because they possess another advantage, that of quickly adopting and promptly responding to changing conditions in the international markets. They have ability to adopt the approach of flexible specialization. In order to enable enterprises to respond successfully to the intense international competition and the continuing changing preferences of consumers, radical changes should be brought about in the areas of management, production and marketing of both goods and services. In order to be result oriented, all available resources should be mobilized following a scientific and coordinated approach both in the government and private sector. Special emphasis should be given in the cooperation amongst enterprises regarding modern design, market research, as these factors constitute the basic elements of success in competitive export market abroad. Rising competition necessitates policy change towards product quality, style and specialized segments in clothing export products. (viii)