Turkey’s newest ‘crazy project’
I am grateful to the Central Bank for banning me from their regular meetings with economists. If it weren’t for that, I would have missed, like most market economists, the unveiling of Turkey’s new megaproject, which coincided with the bank’s latest meeting on May 21.
It wasn’t a rent-seeking construction project disguised as a financial center. Or an unrealistic canal bound to destroy Istanbul’s ecosystem. Or an unfeasible new airport handed out to President Recep Tayyip Erdoğan’s cronies. Kemal Kılıçdaroğlu, leader of the main opposition Republican People’s Party (CHP), revealed a CHP megaproject called “Turkey Hub” (Merkez Türkiye).
The project is simply that -- a new city in the center of Anatolia that would become a manufacturing and logistics hub for the whole world. Before evaluating it, you should remember that Turkey’s growth model based on external financing is not sustainable. The country cannot grow more than 3-4 percent a year anymore and as a result, has become stuck in the middle-income trap. Turkey has also not been able to make the transition to high-tech, high-value products.
But these problems are only trees. They may be giant sequoias, but they are still trees. At the “forest level,” Turkey is being left out of 21st century economic trends. At the last two IMF-World Bank Meetings, the most packed seminars were the ones on how emerging markets could participate in global value chains (GVCs), which are not on the government’s agenda. Not only have we not been able to integrate into the global economy, we are not even trying to. This is a pity as Turkey’s location is unique. Kılıçdaroğlu underlined that we have access to 58 countries, 1.5 billion people and a market of $21.6 trillion within a 4.5-hour flight radius.
Once you start by thinking about these issues, all of which are actually related to each other and were highlighted by Kılıçdaroğlu, as well as the country’s advantages, it becomes clear how the CHP’s megaproject would be a panacea, not only for the trees but also for the forest. Of course, creating a city from scratch is not easy, but it would be even more difficult to make it a center of attraction for local firms, let alone for the region and whole world.
I would, of course, need to see the details, but it seems a lot of thought has gone into this idea. For example, the CHP is envisioning an enclave that would be run by business groups and NGOs, while having zero bureaucracy. I should also tell you that this is economics at its best. Recent cutting edge, policy-oriented research has been highlighting the importance of cities and GVCs for economic growth and development.
I would not claim that the CHP has everything laid out. For example, Kılıçdaroğlu’s promise to send 15,000 university graduates to PhD programs abroad would not be a sufficient condition for the country to start producing high-tech goods. Besides, we also need better low- and medium-skilled workers, and for that, the whole education system would require an overhaul.
But this is still the most feasible megaproject to date. If realized, Turkey would achieve, similar to the likes of Singapore and South Korea, a high-income status. If nothing else, a “crazy project” that is more than a rent-seeking construction scheme is a breath of fresh air.