With the renewed coronavirus threat and strict measures, particularly in Europe's leading countries, the world's prominent economists are trying to measure, predict and manage the impact of the pandemic on production, import, energy and labor costs.

From global to local companies as well as national to international economies and institutions, next year's agenda will prioritize critical topics such as cost management, efficiency and sustainability of production. In this context, "the cooperative system," which is deeply entrenched in the cultural aspect of the Turkish economy, seems to be on the agenda in 2022.

Turkish economy headlines

Since 2017, I have been emphasizing that the most critical issue for the Turkish economy is the "cost increase" while "cost management" is one of the most critical topics in terms of the position of the real Turkish sector in global competition. The "cost pressure" has been further compounded for the Turkish economy by the global commodity, food and energy prices due to the pandemic.

In addition, the gap between the producer price index (PPI), an indicator of cost inflation, and the consumer price index (CPI), an indicator of demand inflation, also widened in all of the 45 leading countries. The difference between the PPI and the CPI increase rates in both G-20 and Organisation for Economic Co-operation and Development (OECD) member countries varies between 1.4 and 5.3 in favor of the PPI. For example, it is 1.42 for the U.S., 4.55 for Germany and 5.3 for France.

Without exception, all economies are experiencing annualized PPI growth rates well above the average cost inflation calculated for the last 40 years. We are talking about 9.6% for the U.S., 18.2% for Germany and 14.9% for France.

All the leading economies of the world are stuck between how to solve the cost increase in production and negating a reliance on monetary policy measures to compensate for the pandemic's negative impact on production, employment and investment. China is the country that seeks a solution to the increase in the cost of raw materials and intermediate products in the economy with a different method, the cooperative model.

Beijing's method

Chinese think tanks, especially universities, are searching for solutions on how Chinese companies can eliminate the increase in production and logistics costs and reduce costs. One of the solutions is for the companies operating in the leading sectors of China, even if they compete among themselves, to buy the raw materials and intermediate products required for production collectively with the cooperative model and achieve a cost advantage of 20% to 28%.

Based on the same idea, it is recommended that China's powerful sectors in global trade establish container manufacturers with the cooperative model and manage costs by acting together in logistics. It is said that exporting companies can also create a flow model that will ship the export goods in an order.

All nongovernmental organizations (NGOs) representing the Chinese real sector call for chambers and unions to play a role in organization and coordination. Turkey's NGOs will also certainly think about practical solutions for cost management.