Middle-Technology Trap: The Case of Automotive Industry in Turkey

Abstract

This chapter aims to investigate whether manufacturing success in Turkish automotive industry stimulated technological learning and innovation capabilities. Detailed information from a primary R&D and innovation funding agency is used to show that the technological characteristics of the funded automotive R&D and innovation projects remained reasonably stable between 1995 and 2011. This result is cross-validated with two qualitative research designs on beneficiary firms and automotive industry experts. Three mechanisms explain how the Turkish automotive industry has fallen into a middle-technology trap on the borders of a weak innovation system (IS) and strong global value chains (GVCs). Analysis at the project, firm, and expert levels indicate that despite extensive upgrading and learning in manufacturing, the automotive industry failed to build innovation capabilities. Turkey’s delegated role in the automotive GVC, the joint venture (JV) structure and the lack of complementarities collectively work in creating a trap that impedes further technological development.