Güven Sak, PhD - [Archive]

Women will save Turkey 25/12/2012 - Viewed 2352 times

If they leave their homes and join the labor force, women really can save Turkey.

I remember a story in Bloomberg earlier this year that said the sales of adult diapers in Japan exceeded those for babies for the first time this year. The story was about the rising share of people over 60 in the population changing consumer behavior. By 2050, 36 percent of Japan’s population will be over 60, compared to 9 percent presently. The working age population (15-64) that peaked in 1995 with 87 million people is expected to gradually fall to 54 million, the bottom level recorded in 1945. So, how can Japan grow in the period ahead? Under normal conditions, as the employed population will shrink, the economy also will shrink. So, Japan has to either enhance its productivity level or increase the size of the employed population, by a new migration policy for example. Within this context, a recent study by the IMF discussed whether women could save Japan. Given the relatively low female labor force participation in the country, the report measured the positive impact of raising the rate and discussed ways to do it.

By the way, don’t get me wrong when I say Japan’s female labor force participation ratio is low. It is still not comparable to that of Turkey: It is 63 percent, even better than the 55 percent of Korea that we envy. Turkey’s 28.8 percent is not even able to make it onto the list of the group of weak-performers. The IMF study I mentioned is based on OECD statistics, excluding Turkey.

Anyway, the focus of the IMF study is as follows: the report analyzes at length the impact of a theoretical rise in the female labor force participation rate, from 63 to 70 percent. The conclusion I reach here is that if Turkey could raise the female labor force participation rate to Japan’s current 63 percent, the economy would start growing at a higher rate.

Until today, Turkey has been able to grow thanks to the rural to urban migration. In the 1960s, 70 percent of the population lived in rural areas. Now the rate has decreased to 25 percent. Meanwhile, the productivity of rural to urban migrants has been tripled. Until today, Turkey has been able to grow mainly via migration. Now, however, the great migration process has ended. Rapid growth now requires measures to improve the productivity in individual sectors as well as creating new sectors. Studies by TEPAV researchers suggest that over the last eight years, productivity in Turkey has grown by 15.9 percent, 84 percent coming from productivity gains within sectors. As desired, the share of migration in the productivity gains has decreased. Yet, the gains originate from the services sector, while industry does not seem to have made a significant contribution.

This commentary was published in Radikal daily on 25.12.2012

It is for a reason that Turkey has moved out of the league of industrial giants. Studies reveal that industrialization is the way to converge with advanced countries. This is not the path Turkey has been following, however. Turkey is not devising successful incentives or measures to enhance its investment climate in order for sustainable productivity gains. Unfortunately, the two pennies of state support cannot compensate for the attraction of unearned land rents.

During the first rent economy era of the 1990s, Turkey flaked out and avoided structural measures. At the end of the process it was shocked to see China ahead of itself. Similarly, Turkey wasted time in the second rent economy era of the first decade of the 2000. Engrossed in sharing the land rent, Turkey has not taken any structural measure to enable a qualitative transformation and boost its economy since 2007.

The justice, education, and tax statistics are self-evident. Under these circumstances, I believe that it is women who can save Turkey. I cannot tell them how many children to have like the meddlesome statists of the 1930s did, but if they leave their homes and join the labor force, they really can save Turkey. They can make up for some of the time wasted during the second rent economy era. If women continue to stay in their homes however, the 2023 targets will remain a sweet dream. Let me note this in advance.