Will the recent adjustments pave the way for foreign investments?
Güven Sak, PhD
29 July 2011
Turkey so far has grown rapidly "with the blessing of God" and now is slowing down automatically. On Tuesday, I said, "There is no need to worry, but it is useful to be concerned." Taking departure from that point, let's start to examine the potential outcomes of the ongoing exchange rate adjustment. Let today's topic be this: Will the exchange rate adjustment pave the way for foreign investments? Will Turkey become an important area of investment for international value chains when the adjustment is completed? Will the fate of Turkey change? To be honest, I have doubts. Let's try to figure out how the investment climate of a turbulent country will be.
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There is no need to worry
Güven Sak, PhD
26 July 2011
For now, there is no connection between what we are witnessing and what Europe is going through. The recent market movement has domestic causes. There is no need to worry because there is nothing unusual. Because our economy has heated up too quickly, the thermostat system has been activated. The economy will cool down automatically through exchange rate movements. The uncontrolled high growth will slow down. Still, it is wise to maintain the anxiety since a new world will be established with a new price level. In this new world, everyone will earn a share in line with their balance sheets. There is no need to worry; however, there are a number of reasons to be concerned. Let me tell you why.
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‘Let’s go to Tahrir’ in Nicosia
Güven Sak, PhD
23 July 2011
I have noted some time ago that there are two types of countries in the Middle East, the ones that require demonstrations in their Tahrir Squares to initiate change and the ones that can use the ballot box for the same purpose. Northern Cyprus belongs to the second group while Egypt has invented the Tahrir Square model. There is discontent both in Cairo and Nicosia. A cultural change is needed in both cases to tackle their problems directly. Egypt seems to have found a way, while Cyprus has a way to go yet. Does the Cyprus case show the limits of the ballot box as a transformational device? I do not think so.
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No asphalt roads, no automobiles.
Güven Sak, PhD
22 July 2011
The pictures below of two families from Egypt and Chad, respectively, are good course materials for understanding the technology content of the import demands of the two countries. When I was wandering around Iraqi Kurdistan some while ago, district electricity generators were one of the things that attracted my attention. I learned later that this used to be the case also in Turkey. Back then I wrote a commentary for the newspaper Radikal with the title "Have you ever installed a line at the power plant of a district?" A friend of mine sent me an e-mail saying "We used to do it in Yenipazar, Aydın." Have you ever thought about how the infrastructure can affect the import demand of a country? Let's do that together.
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No new orders from Syria since the New Year
Güven Sak, PhD
19 July 2011
Syria is among the top five trading partners of Kocaeli. It seems that the country's lack of an industrial strategy will be very costly. Recently I visited Kocaeli, an industrialized province in northwestern Turkey. I attended a meeting organized by the Kocaeli Chamber of Commerce. During the lunch, a businessman from the Chamber Assembly said, "We have not received any orders from Syria since the New Year." He seemed to be concerned about the Arab Spring. I remember thinking, "How important can trade with Syria be for Kocaeli?" It appears that I was wrong. Syria is one of the top five trading partners of the province. I have to admit that this has confused me. It seems that the lack of an industrial strategy will be costly. Let me tell you why.
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It's the politics, stupid
Güven Sak, PhD
16 July 2011
For a professional economist, the global crisis is a heaven-sent opportunity to observe what is normally unobservable. Crises are good laboratories. Nowadays, I am thinking of the dynamics of policy response in the case of a "global economic crisis" versus an "economic crisis in one country." The policy response to an economic crisis is almost always a political one. The question is this: Is an economic crisis an opportunity to start dealing with the long-neglected structural problems of a country? Or Does the latter eventually require a political crisis? Which one do you think is easier? "Crisis in one country" case or a "global economic crisis case"? Looking at the Turkish experience, I tend to favor the first one. Look at Italy, for example. Berlusconi vs. Tremonti is more un
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Turkish companies rank first in World Bank tenders
Güven Sak, PhD
15 July 2011
Companies that built highways and big construction projects in the Özal period today have become giants which seek business opportunities on the global scale. Recently a friend of mine working as a vice president at the World Bank (WB) told me, "The successes of Turkish construction firms are astonishing." Seeing no spark in my eyes, he added, "Turkish firms are number one in WB tenders." I have been hearing this constantly for some time. A couple of days later, he sent me a large computer file about the WB tenders. The figures were really impressive. Between 2003 and 2011, almost all construction tenders opened by the WB were won by Turkish companies. Almost all tenders in various parts of the world from Venezuela to Tobago, Afghanistan and Ethiopia were won by Turkish companies. The late
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PM Erdoğan must take care of neglected issues.
Güven Sak, PhD
12 July 2011
Turkey has to get over the attitude of an average student who is content with the minimum grade to pass the class. Turkey has neglected issues, as I mentioned last week. Today, Turkey is looking for someone to take care of them. One election campaign poster remains on a billboard on the Ankara airport road. It has a giant picture of the Prime Minister and the slogan, "We will take care of the neglected." I like to read it as "We will take care of the neglected issues of this country." A series of issues that have been left on the back burners must now be addressed. The Honorable PM Erdoğan also must deal with these neglected issues. I want to reiterate this before the parliament is formed so that I can recall this when I am asked, "why did not you speak if you knew about it?" Let me tell y
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Why business as usual between Israel and Turkey
Güven Sak, PhD
09 July 2011
The well-known secret around town nowadays is the increasing number of contacts between Israel and Turkey. I don't know whether official contacts are working in the right direction. There are rumors, but when in the economy, there are concrete figures. When it comes to the economy; it is business as usual between Israel and Turkey. Let me tell you why...
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500 billion dollars in exports cannot be achieved with marketing departments
Güven Sak, PhD
08 July 2011
Those who show interest in Turkey are the marketing departments of large globalized companies seeking the country's domestic market. The election is over. The will of the people has been revealed, and all of us are trying to interpret it. Those who take the oath and those who refuse it are all acting in accordance with their own goals. I do not see a problem in that regard. Everything is in order there. Things are more entangled on the economic front. I am not talking about the risks involved with the current account deficit. Everyone, including the administration, is aware of that problem. But there is a structural problem nobody will take on. With your permission, I will touch on this neglected problem today. It is a good time to do so, since the administration is devising its
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