The industrial sector in Turkey has been the primary focus of government policies since the early 1950s. Industrial policy until 1980 was based on an import-substitution strategy. This protectionist approach was very successful for several decades, and the sector grew at an average rate of 8.6 percent annually until the late 1970s. The first factories built in the country processed food and non-durable consumer goods , and remain among Turkey's most competitive manufactures. The next phase of development was in industries such as iron and steel, chemicals, and cement. By the end of the 1970s, capital goods and high-technology products had become the primary focus, but the rapid industrialization was taking its toll on the sector. Efficiency problems and energy shortages began to slow down growth, and prevented industry from becoming competitive in the international markets. The liberal economic policies introduced in 1980 were designed to address these issues by establishing a less protectionist, more outward-looking industrial policy. The idea was to use market signals to identify un-competitive industries, transfer their resources to those industries where Turkey enjoys a comparative advantage, and thus compete in world markets. This strategy necessitated a greater emphasis on private sector-led growth. Accordingly, policies and reforms were designed to facilitate rapid expansion of the private sector.
While much progress has been made in the industrial sector since 1980, the process is still not complete. Public sector companies continue to dominate a number of critical industries, particularly those such as energy and steel whose products are crucial to private sector companies. Still, the industrial sector has achieved an average growth rate of 6 percent since 1990, and Turkey competes successfully in several areas of the international market. The country's abundance of natural resources, its geographical proximity to export markets, and the existence of a large domestic market give Turkey competitive strength in a diversity of industrial sectors. In 1999, the industrial sector in Turkey contributed to 29 percent of GDP and employed 27 percent of the labor force. More remarkably, industry accounts for 89.4 percent of Turkey's total export earnings. The key industries in Turkey are textiles, iron and steel, chemicals, cement, food processing, motor vehicles, construction, glass and ceramics, and mining.