Turkey should find oil or attract more investment to avoid middle income trap: World Bank
Tolga Tanış WASHINGTONTurkey needs to rebuild trust to attract more investments so as to avoid the middle-income trap, said the World Bank Country Director for Turkey, Martin Raiser.
“Only a few countries had been able to avoid the middle income trap until now by finding oil on their soil or by increasing their savings and luring more investment in significant levels. Turkey needs to rebuild trust for investors,” Raiser said in a special interview with Hürriyet following a meeting at the Brookings Institute in Washington.
There is something the countries which have been able to avoid the middle income trap have in common, according to Raiser.
“All of these countries have strong institutions. Turkey is still a middle-income country with its public finances, regulation quality and rule of law standards… Turkey needs to do more to go beyond what it has succeeded in these areas to be able to maintain its economic success and to become a high-level income economy,” he said.
He said he is not pessimistic about the Turkish economy’s potential.
“Turkish citizens and businesspeople can climb the income ladder to much higher areas. I, therefore, am not pessimistic about Turkey’s potential to become a high-income level country. Yet the needed improvements do not realize automatically,” he said.
He noted foreign direct investments (FDI) to the country have decreased since 2008.
“Turkey offers many opportunities to investors. Investors now want to see whether Turkey is willing to realize the structural reform proposals in its 10th National Development Plan and 25th Action Plan. They want to know whether the country will be successful in creating independent and robust economic institutions,” he said.
There are three big steps which Turkey needs to take to avoid the middle income trap, according to Raiser.
First of all, Turkey needs to increase productivity levels, deepen trade integration in services, encourage innovation and make the work environment more competitive with a series of policies to attract more FDI, according to Raiser. Secondly, it is of great importance for Turkey to develop policies which will increase the participation of young people and women into the workforce. Last, but not least, Turkey needs to continue realizing reforms to raise the quality of its economic institutions, he noted, adding the country has already defined what should be done in the 10th Development Plan.
“Turkey can give a strong reform signal to existing and potential investors if it could set a clear law-making calendar, even before the June elections. Any solid negotiations to participate in the Trans-Atlantic trade deal and to extend the Customs Union with the EU and the U.S. would also make a great contribution,” he said.