Turkey’s economy needs to be freer, study shows

ISTANBUL- Hürriyet Daily News

New buildings rise in Istanbul’s Ataşehir on the Asian side, where the government is planning to found a finance center. Turkey lags in economic freedom, a recent study says.

While Turkey dreams of being among the world’s top 10 financial centers by 2023, a joint study completed by the Washington, D.C.-based think-tank Heritage Foundation and The Wall Street Journal currently ranks Turkey number 73 out of 184 countries in terms of economic freedom, a finding that would indicate Turkey still has a long road ahead if it wants to meet its 2023 targets.

Turkey scores 62.5
Turkey’s economic freedom score is 62.5, corresponding to a “moderately free” classification, according to the 2012 Index of Economic Freedom. Turkey ranks smack in the middle of Montenegro, which ranks 72nd on the scale, and Saudi Arabia, which holds the 74th spot. While the country’s overall score is marginally higher than the world average of 59.5, Turkey ranks 34 out of 43 countries in Europe.

Furthermore, according to the latest data, Turkey’s score has dropped 1.7 percent since last year, which the index attributes to an “explosion in government spending.” When looking at the graph of Turkey’s performance over time, one can see that from 2008 to 2010, Turkey witnessed a steady increase in its score, but the period from 2011 to 2012 registered a drop.

The study praises Turkey’s banking sector for weathering the global financial storm and notes the Turkish economy is one of the region’s most “dynamically developing economies” but pinpoints the following shortcomings:

Turkey’s transition slowed
“Turkey’s transition toward greater economic freedom has slowed notably, weighed down by lingering institutional shortcomings. Property rights are moderately well protected, but the relatively inefficient judicial system is ineffective in combating corruption. Chronic fiscal deficits highlight the need to enhance public finance management and restructure public-sector programs.”

The 2012 Index of Economic Freedom ranks 184 countries and looks at 10 different benchmarks to gauge economic freedom. These 10 benchmarks are categorized under four thematic sections: rule of law, limited government, regulation efficiency and open markets. Under these four headings, data is compiled examining subheadings such as property rights, freedom from corruption, government spending, fiscal freedom, business freedom, monetary freedom, labor freedom, trade freedom, investment freedom and financial freedom. The data examcovers the period from the second half of 2012 to the first half of 2011.

The top three positions are occupied by Hong Kong, Singapore and Australia, giving them the luxury of being titled “free” countries. The most “repressed” countries include usual suspects like North Korea, Venezuela and Iran.