We need to listen to the warnings of TÜSİAD
Last week the Turkish Industry and Business Association (TÜSİAD) warned Ankara about certain negative developments currently taking place. Its criticism also touched on the effects of recent economic and political mistakes.
The reasons for Turkey lagging behind in the global technology era were summarized in the TÜSİAD High Consultative Council meeting attended by Prime Minister Binali Yıldırım. TÜSİAD Chair Erol Bilecik compared the 2002-2007 period with the 2010-2017 period. Although growth was achieved in both periods, important differences in terms of both quantity and quality exist between them.
According to Bilecik, in 2007 core inflation fell to 4.8 percent while in 2017 it rose to 12 percent. In 2007 foreign debt dropped to 36 percent while in 2017 it increased to 51 percent. He also said direct investments financed fifty percent of the current deficit during the first period but in the second period this ratio dropped to one fifth.
Bilecik linked economic growth success in the pre-crisis period to reforms and good relations with the West.
“The post-crisis growth policy was predominantly based on cheap money and a large amount of hot money, with consumption and public spending carrying significant weight,” he said.
This approach led to deteriorations in our financial indicators and increased “fragilities.”
“When these fragilities were combined with a negative perception of Turkey generated by tensions with many of our trade partners, and especially the EU, our country’s risk perception levels worsened,” he said.
Bilecik said Central Banks were not designed to create prosperity and growth but to ensure price stability, as mandated by the constitution.
“In economy literature, unfortunately there is no ‘high inflation and high growth’ duo. Such growth is unsustainable and almost always temporary,” he said.
Bilecik spoke about international global developments, Turkey’s position in regional struggles, basic problems such as justice and education and the Kurdish issue, and explained how these factors have had a negative impact on the economy, adding that Turkey needed to work on a new development strategy.
He said the private sector has the capability, energy, ambition and skill to push the country forwards.
“What we need are reformist economic policies that promote consistent and efficient production, increasing our competitiveness. We also need a contemporary education mindset, a foreign policy that knows the importance of global integration, a judicial system that functions with global rules and fights corruption,” he said.
Speaking at the same meeting, TÜSİAD High Advisory Board Chair Tuncay Özilhan said Turkey had to act in accordance with the established rules of the world order.
“Whether Turkey’s place is with the Western world or Eurasia is not a matter for discussion. Turkey is the West’s door to Eurasia,” said Özilhan.
He recalled that developments in economy and foreign policy were not independent from political and judicial framework and that the basis of the liberal market order was democracy and the rule of law.
Özilhan stressed that the independence and objectivity of the judiciary, freedom of thought and expression, a free and scientific academic atmosphere, a free media and internet environment, a well-defined separation of powers and responsibilities and an effective public administration, were important parameters of a country’s competitiveness.
He said moving away from the usual democratic process would deter first foreign and then local investors, prompting them to seek creativity and entrepreneurship elsewhere.