Prescription for Turkey's economy: Rule of law and pluralistic democracy
As long as Turkey remains distant from pluralistic democracy and the rule of law, and as long as it cannot secure an inclusive political atmosphere that is the most essential requirement of co-existence and economic development, all the economic gains it has achieved will be temporary and unsustainable.
As long as the right to scrutinize the budget cannot be used fully and transparently in Parliament, as long as the perception of corruption and bribery rises in the country, and as long as all claims are swept away as “coup attempts,” development will be obstructed.
A country that lacks savings and that has nearly 3 million unemployed among its workforce does not need a pluralist nepotism, but rather an inclusive pluralism, a democracy based on the separation of powers and a facilitation of the rule of law.
Turkey’s recent economic history has two phases: The first one is between 2002 and 2007, influenced by the reforms of Kemal Derviş, marked by high growth and the intense use of IMF money. The second phase is after 2008, when the benefits of global liquidity were enjoyed, when reforms were postponed, when political pluralism was neglected and when polarization, lawlessness and the perception of corruption rose.
The reforms of the first period led to the transition to a strong economy. These reforms had to be supported by other related reforms in order for economic growth to be sustainable. If they were not supported in such a way, growth would not be sustainable.
Well, the latter has turned out to be the case.
In the second phase after 2008, the global economic crisis and the inflow of an abundance of money to countries such as ours brought a kind of “lethargy of comfort.” After very high growth in 2010 and 2011, an economic course of slowdown and fluctuations came.
The past year witnessed a number of global economic developments that disrupted countries such as ours, which have a savings deficit accompanied by an increased authoritarian political trend domestically. This picture is more negative for the long-term direct investments that such countries needed, than it is for short-term capital. Short-term capital can leave at any time, selling its bonds or shares.
However, long-term capital views the country from a perspective of at least 20 years. When its “appetite” is gone, it does not have the flexibility of short-term capital to pack up and leave. For this reason, it scrutinizes events. Is there the rule of law? Are political institutions effective over the judiciary? Is the process of doing business subject to bribery at political levels? Is it based on political subjectivities? If there is any unsatisfied politician, will he use the public auditing power over companies to punish them?
Well, Turkey after 2008, when the era of an abundance of money ended, instead of conducting reforms to improve the political, legal and economic environment that would encourage direct investment and long-term capital, on the contrary made the regulations worse. In the last couple of years, this deterioration has accelerated.
Today, for Turkey to escape the middle income trap in which it is caught, it must increase direct investments. The main requirement for that is the rule of law, a pluralist and participatory democracy.
The authoritarian trends we are experiencing today will take us nowhere but deeper into poverty and unemployment.