EMRE DELİVELİ > Why Turkey is NOT Thriving

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Columbia University professor Jeffrey Sachs published a commentary on Project Syndicate on May 27 titled “Why Turkey is thriving.” I beg to disagree.

My picking on Jeff, as he told me to call him when I was at his teaching assistant at Harvard University, risks putting an amateur lightweight against a heavyweight champion. Besides, I owe him for having introduced me to Bono. But Turkey is my home court, and I cannot resist the urge to correct the several misconceptions in his article.

For example, the fall in inequality has been rather modest. In fact, the key to the ruling Justice and Development Party’s success has been the growing middle classes, which have increased their share of income at the expense of the richest and the poorest and seen a significant rise in their purchasing power thanks to the macroeconomic stability and fall in interest rates.

Likewise, while it is true that exports are “increasingly headed south and east to the emerging economies, rather than west to high-income markets,” the technological content of the country’s exports is falling. Many Turkish economists link the two, arguing that these new markets in the Middle East, North Africa and Asia demand less sophisticated products.

Sachs has not got it all wrong. Although he does not dwell on the lack of structural reforms, or the vulnerabilities, or the housing boom, he is right that the Turkish success story has been built on fixing the banks. But I was shocked when he praised Turkey’s innovation and education, which have actually been found to be the country’s binding constraints to investment.

Sachs is the latest in a long line of celebrities, such as gladiator Russell Crowe, who have recently declared their love for Turkey, or at least to Istanbul. I think this is simply because more and more people are making it “is tin poli,” or “to the city.” Istanbul is now sixth in the MasterCard Index of Global Destination Cities, which ranks cities in terms of their total international visitor arrivals and spending.

Interestingly, tourists’ perception of Istanbul, and more generally Turkey, is vastly different from that of many locals. A recent Pew survey found Turks to be very pessimistic about the near future. We Turks are a gloomy bunch, but the country also ranked at the bottom of the OECD Better Life Index, which was released the same day Sachs’ article was published.

Many short-term visitors never see Istanbul’s ugly face: Their hotel is conveniently located away from the maddening traffic. They would not even be aware of the latest alcohol bans. They never get tear-gassed. They only meet with the most educated Turks. And once the government delivers the finance arbitration it has promised, they will think Turkish courts are very efficient.

This dual structure looks a lot like Dubai, which had, along with Istanbul, the highest arrivals growth rate in the MasterCard index. I myself feel, perhaps because of my columns in English, more like I am in colonial India, sahib.


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Notice on comments

The Prisoner

6/4/2013 1:27:19 PM

@Ruth Cansiz, I may be a newbie (15 years is a blink of an eye) but I have to disagree with your statements. Turkiye has modernised very quickly but most of this is because of previous party's hard work, of which AKP reap the benefit. As for coffee presses etc LOL! Are you sure you weren't in Afghanistan and got confused?

Eric Martin

6/3/2013 1:40:47 AM

@Kypros. It is impossible for everyone and every region to grow at the same level. A growing economy is necessary to pull everyone out of poverty. Socialism has never worked anywhere including europe. China knows this. There is now a Chinese upper rich but also a middleclass.

Peter Kypros

6/1/2013 12:14:19 AM

Any economic analysis should also take into account the standard of living of people. China and India have booming economies but vast populations still live in poverty. Turkey does'n seem to be in that extreme but definitely the standard of living in Turkey is much lower than many economically troubled EU countries and this is evident outside the touristic lavish areas. The challenge is to have strong economy as well as high standard of living. Missing the 2nd it makes things look as bubble

Pawel Bury

5/31/2013 11:44:59 PM

@ilker avni, as a French deputy said, Constantinople was part of Europe. Istanbul is not. The heart of Turkish economic growth is privatizations. In addition, cheap working hands has given a boost to any industry. However, if cheap working hands and a soft currency aren't enough to deliver export growth, things are not looking so good.

andrea dealmagro

5/31/2013 10:39:23 PM

The question is whether increased demand for goods and services is fueled by real higher wages or borrowing. Lower interest rates lead people to fall in debt beyond their means. That is dangerous. As for the tourists, writer is correct because majority stay with organized tours in touristy areas and don't mingle or go where the "natives" live. There is no substitute for walking in Istanbul, or anywhere for that matter.

Eric Martin

5/31/2013 10:35:04 PM

@Emre Deliveli - Turkey was too focused on just Europe. It's just a slowdown there. We're not trying to not to sell there. Joint venture cars are practically European cars. The chart with Middle east and African sales is not a negative but a great positive in my opionion. Mr Deliveli, I hope you write an article on the benefits of a FreeTrade agreement with the USA. @ Mara mcglothin and Ruth Cansiz - LOL. They used bring the sheep in to cut the grass in the parks.

Laz Kemal

5/31/2013 7:59:59 PM

Let me clarify for those who may not know where I am coming from. There is a saying in the western world which is “behind every successful man there is a woman.” My own best saying for the Islamist (not Muslim) world is that “behind every Islamist woman there is a tyrannical Islamist man”

Laz Kemal

5/31/2013 7:54:58 PM

Women represent about a quarter of labor force in Turkey and it’s almost double that in US. So how anyone thinks a country’s economy can grow when most of half the population is left out of the workforce I do not understand. But Jeff maybe is upset and jealous with his own situation and wishes he was a male worker in Turkey since recently it was reported that in US amongst working couples 40% of women earn more than their husbands !! Don’t these women know their place in the society ??

Laz Kemal

5/31/2013 7:47:24 PM

Let me repeat. AKP benefited from Dervis’ policies implemented to address Turkey's banking crisis that was years prior to US banking crisis. AKP also benefited from worldwide investments into emerging markets that took off a decade ago too. Although AKP deserves credit for adapting capitalism and privatization, unless you create many new jobs and new fields one has to wonder how you can claim to be “wealthy” by just selling “all your belongings” And even that's becoming an ugly trade-off

Blue Dotterel

5/31/2013 7:46:49 PM

If they keep gassing tourists in Beyoglu, this attitude of even short term tourists may change.
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