Speeches
Speech by Consul General Wiener at the American Business Forum in Turkey 3rd Annual Innovation Conference
June 11, 2009
(As prepared)
"Challenge, Freedom, Innovation"
Thank you Galip, distinguished guests. I would like to thank the American Business Forum in Turkey for organizing this conference, and for carrying this tradition annually on into a third event: this is a vitally important subject, and you have done much to draw attention to it.
During President Obama’s trip to Turkey, he discussed focusing more effort on expanding bilateral trade and investment with President Gul. The U.S. and Turkey have recognized that our relatively small economic relationship is out of proportion to our robust security relationship. As a result of this historic meeting we are working hard to find innovative measures that will increase our trade. On the government-to-government level various ideas have been proposed. At the end of the day, of course, trade and investment are business decisions and one of the missing ingredients thus far has been business as an active participant in government to government discussion. This conference is well timed to generate ideas in this regard.
Turkey has great potential to develop into a more innovative and advanced knowledge-based society. Turkey has a young population and young people are key “early adopters” of innovative technologies, and its companies seek out ways to produce more efficiently. Turkey’s ability to compete in global markets, to keep its best minds in the country (or to attract the return of those who studied outside of Turkey), to continue to create the jobs necessary for its growing population and to attract crucial foreign investment and entrepreneurs, are all in some way connected to those measures which it needs to take to foster an innovative economy and business culture.
With all the bad news coming from the United States recently, it is perhaps hard to see the good parts of our system. The U.S. financial system problems and waves of bad news about the U.S. auto industry have made big headlines around the globe. What you may not hear about are the smaller start-up companies that keep moving ahead regardless of the macro economy. These smaller firms, driven by innovators and entrepreneurs, flourish in the U.S. largely because we have maintained a culture of openness, entrepreneurship, and innovation. This sector is historically the largest source of job creation in the economy, and will play a part in lifting our economy out of this recession.
They say: necessity is the mother of invention, but economic adversity can also be the mid-wife of innovation. Innovation may be one of the only things that increase during hard economic times. The iPod, MTV and the popular specialty market Trader Joes are just a few examples of innovations born in times of serious recession. During recessionary times, consumers’ values change. These are times when conservative competitors may be pulling back across the board and giving up their plans of expansion and new products. Many firms think that spending on innovation is just a frill. It may actually be the best time to seize the opportunity and offer new businesses and new ideas to customers that may just value the difference. Historically, a recession is not a deterrent for startup businesses. In fact, a large number of stellar companies started up in recessions. They include IBM, Disney, General Electric, HP, and FEDEX. The entrepreneurial concept of filling-a-need works just as well in recessionary times. Hard times force companies to focus on developing smart and creative ways of delivering value and service to customers. They do not have the luxury of having an economy flush with cash. For good companies this will trigger the mechanisms that make them look at smart and more effective ways of doing things. This takes new ideas. This takes innovation.
I would like to point out why I believe America’s innovative spirit thrives and keeps thriving in difficult times. It is our openness – our fundamental belief that we are stronger as a nation when we welcome to our shores the world’s products, ideas, investment, and people – that gives us the ability to respond to new challenges and new competitors. Writing in Foreign Affairs magazine, Fareed Zakaria wrote that America has found a way “to keep itself constantly revitalized by streams of people who are eager to make a new life in a new world.” Half of all Silicon Valley start-ups today have at least one founder who is either an immigrant or a first-generation American. Our political system is built on the notion that all Americans have an equal opportunity to rise as far as their individual ability and drive will take them. Our innovation economy benefits from low taxes, an aversion to the stifling hand of government regulation, and a respect for others’ ideas in the form of strong patents, copyrights, trademarks, and other intellectual property rights. And our education system rewards independent thought and keeps us questioning, wondering, and always searching for ways to make things better.
In almost every way, America has grown stronger from its openness to the world. In this time, when the winds of economic isolationism are blowing strongly, it is useful to remember that our openness – to foreign products, foreign capital, foreign ideas, and foreign people – is one of the most important reasons why the United States has been the world’s most innovative and dynamic economy for more than a century. The American experience, and that of many other countries who have successfully established societies which foster long-term growth through innovation, point to a few key common characteristics:
Industrial Policy
Innovation cannot prosper if it is centrally directed by government policymakers, or is impeded by artificial boundaries – like restrictions on the Internet – that interfere with the free flow of ideas across borders. When governments use industrial policy to decide which ideas, products, and companies can compete, the result is technological and economic stagnation. Industrial policy means that government officials, rather than innovators, imagine a possible future and then direct economic resources to achieve that future.
Resources for innovation are limited, so the question is whether governments or markets are more efficient at distributing those resources. History shows that if the market is allowed to determine the use of R&D resources, and customers are permitted to buy the products they want, resources and innovative products flow more efficiently.
Intellectual Property Rights
The world is now beginning to understand the dangerous consequences of counterfeit materials making their way into products such as toys, food, pharmaceuticals, autos, and electronics. Counterfeiting doesn’t just erode consumer confidence—it can put consumers in danger. Counterfeit software can crash a computer’s hard drive, but counterfeit drugs can kill.
Consistent, transparent and equitably enforced rules regulating intellectual property increase the incentive to innovate. Without clear rules and strong enforcement, no country can fully develop the economy it wants, nor build the strong, recognizable and respected brands that are hallmarks of developed economies.
Enforcing intellectual property rights provides entrepreneurs with economic incentives to innovate, and also provides consumers with the confidence to welcome those innovations into their homes and workplaces.
Attracting Greenfield Foreign Investment
Much has been made – and rightly so – of Turkey’s recent consecutive record years of foreign direct investment. Some observers have noted that much of this has come in the form of acquisition of existing companies, rather than as “Greenfield” investment - the kind that establishes new productive facilities and creates new jobs.
ABFT members tell us that they face many factors that make it more difficult to do business in Turkey: judicial processes can be extremely slow, and laws unevenly enforced; employment and social security laws effectively punish legal established enterprises; and foreign managers and specialists have enormous difficulty getting work permits. All of these factors make it more difficult for a large company to do business. For a small company, Turkish or foreign, they can make it impossible.
Since the days following World War II, the United States has welcomed Turkey’s integration into the global economy and has supported Turkey’s market reforms. In the United States, we have fostered innovation through openness, recognizing that our ability to welcome and work with the world fuels the flame of American innovation. Turkey, with its rich history of risk-taking and entrepreneurialism, is already on the road to becoming a more innovative society, and I hope that today’s discussion will provide many fruitful ideas for continuing along that road.
Thank you.