Happy birthday AK Party
The ruling Justice and Development Party (AK Party or AKP) was established on Aug. 14, 2001. Finance Minister Mehmet Şimşek celebrated the 12th anniversary with a series of tweets to illustrate his party’s economic success. It is useful to go over his arguments.
Şimşek begins by underlining that GDP per capita has risen threefold under the AKP’s watch. I was hoping the minister had learned the difference between nominal dollars and real GDP after his row with Turkish economics professor Dani Rodrik. He obviously hasn’t.
He continues by noting that while average growth rate from 1923, when the Republic of Turkey was founded, to 2002 was 4.5 percent, it has been 5.1 percent since then. Pre-AKP average growth is low because of several growth collapses, especially in the early years of the republic. But if you take 10-year averages, you’ll see several periods when it was much higher than during the AKP years.
Besides, as Rodrik explains, the “last decade has been an exceptionally good one for developing countries as a whole. When Turkey’s performance is compared to the average for emerging and developing countries, it hardly looks distinguished.” In fact, while the country grew on par with peers until 2007, it has lagged behind significantly since then.
Şimşek continues by underlining the decrease in public debt, but the he fails to mention the corresponding increase in private debt. For example, Turkey’s debt to the IMF, $23.5 billion in 2002, is now zero. But private sector external debt, $38 billion in 2002, is now $238 billion. Similarly, while government debt to GDP ratio fell from 74 percent in 2002 to 36 percent in 2012, the ratio of household liabilities to disposable income rose from 4.7 to 50.6 percent in the same period.
It hasn’t been all doom and gloom during the AKP years. The banking system was strengthened, and thanks to the inflation targeting regime pursued by the newly independent Central Bank, Turkey saw single-digit inflation in 2004 for the first time since 1973. But Şimşek’s arguments on debt and growth are misleading.
Şimşek saves the best for the last by noting that Turkey’s democratic standards and prosperity rose during the AKP rule. I am sure that businessmen close to Prime Minister RecepTayyip Erdoğan, especially those doing business with the Housing Development Administration (TOKİ), saw a huge increase in their wealth. As for the poor, there has been some decrease in poverty, but not as much as the AKP claims.
As for democracy, Turkey is ranked in the 80s in different democracy indices and is one of the more democratic of the “hybrid regimes” that include the likes of Iraq and Russia. Its ranking did not change much during the last decade, but you probably already knew that.
Despite the best efforts of marauders, pitiful rodents and the interest rate lobby, the AKP did not suffer the fate of the Thousand-Year Reich, which lasted a mere 12 years. May they live long and (let themselves and their cronies) prosper.