A new economic alliance Turkey should lead
Increasingly we live in an age of acronyms, knowing the abbreviations better than the full titles. We just concluded the “G-20” Summit in Cannes, the meeting of the biggest economies that accomplished little. Next week will be the “APEC” summit in Honolulu, which groups the leading Asian economies and may accomplish more. There are many others, from the faltering “EU” to the famous “BRICs” to the obscure “Turkic Council” to the emergent “Eurasian Union” at the behest of Russia.
Might we not create one more which I will call the “MOM-33”? It would make more sense than any of those to which I allude above.
I give this acronym to a grouping I bumped across in a series of essays by a team at the Booz & Company consulting group led by Richard Shediac. They call it the “Momentum Group,” those 33 countries – including Turkey – that stand to reap the greatest gains from a fleeting reality that demographers call the “demographic dividend.” These are available for the effort of a Google search. For readers interested in a deeper look at the issue, another important piece of work is C.K. Prahalad’s “The Fortune at the Bottom of the Pyramid” (Wharton School Publishing, 2005).
I turn to this topic amid the wave of essays marking the world’s crossing of the 7 billion population line last week.
In all the prognosticating on the increasingly crowded planet, the point of the more thoughtful is that the numbers of people are immaterial. It is economic, environmental and social policies that will make us or break us.
To simplify greatly, we are generally familiar with the dilemmas of aging populations like those of Germany or Japan. Similarly, many of us are quick to point out that Turkey is “young,” and hence more “dynamic.”
What tends to get overlooked is the “arc of dependency.” All societies go through a period of a young population that is largely dependent on the number of older workers. Like an “S” pushed over on its face, however, this trend line reverses on itself, with overall “dependency rates” then tracking upward again. Now the young must tend to the old. That 10 to 20 year moment in the middle is where the action is. Among these “Momentum Group” countries, India is about to join them, exiting the “Nascent Group.” China is about to move out to an unknown future. Turkey has another decade or so, along with places like Indonesia and Brazil. Upon exit there are really two clubs: the “Advanced Developed” like the Europeans, who at least invested in education and productivity in the good times. The other group is those like Russia, which will be “Developed” but without the skills to compete economically over the long term.
Economic growth is easiest when a country is at the bottom of this curve. It gets tougher as you move up the right of my toppled “S.” At that point, the first policy impulse is to try to extend the life of the “dividend” by delaying retirement ages. Any Greek can explain.
A better bet is increased labor productivity, a focus on competitiveness, planning on pension schemes, a serious environmental policy and, above all, intensive investment in education.
Turkey can go it alone. Or, she might consider teaming up with the “MOM-33.”