Risks ahead and growth prospects
Fatih Özatay, PhD
30 July 2013
Per capita growth rate in the last six years will be 1.85 percent compared to the 1950-2007 average at 2.72 percent. A few years ahead will probably be challenging for Turkey concerning growth. There are many reasons strengthening this risk. The first one is well acknowledged: the series of steps the Federal Reserve (FED) is planning to take in the next three to four years. As a first step it will lower the volume of additional injections it has been carrying out on a monthly basis since the late 2012 and cease additional injections in the mid-2014. Later, according to the available information in 2015, it will raise the federal funds rate, but it will signal the time of rate raises well in advance. At the same time, it will be withdrawing the liquidity it previously injected. In this envi
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Turkey’s Confusion with the Digital World
30 July 2013
We live in a world of contradictions. Each and every country has some of their own, and Turkey is no exception. One of the bizarre dualities it accommodates is about the digital world: On one hand, Turkey appears to be embracing the blessings of technology at full steam. As of February 2013, it had the 7th largest Facebook (membership) presence in the world with over 32 million users. It ranked second only to the US for the largest number of check-in’s in Foursquare. Its broadband penetration rate is around the OECD average, which, when you consider the fact that Turkey is usually an embarrassing outlier along with Mexico in OECD statistics, is quite impressive. Yet it looks like Turkey is lagging behind when it comes to adopting some of the more critical assets of the digital revol
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Why are the higher education exam results tragic?
Fatih Özatay, PhD
27 July 2013
How do people who think that it is a big accomplishment to turn each and every plain plot of land into a construction zone not design a tuition system which will enable students to study at any university they like?
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What’s wrong with doing business in Turkey?
Güven Sak, PhD
27 July 2013
Turkey is the 17th largest economy in the world. Yet, on the Forbes' list of dollar billionaires, the country hit number six recently. In other words, Turkey is not yet the 10th largest economy of the world as envisaged in the 2023 objectives of the government, but it is already easily in top 10 in terms of the number of Turks in the global billionaires list. The country now has 43 billionaires on the 2013 list. The figure was 34 in 2011 and 35 in 2012. 2013 saw a leap forward. Why? The global crisis certainly does not seem to have affected Turkey’s performance in creating new dollar billionaires. What is more interesting to me is a comparison to the number of Turkish companies in the Fortune Global 500 list. It is 1. Let me write it also. Just one. Historically there was only on
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Three children come with $25,000 GDP per capita
Güven Sak, PhD
26 July 2013
Turkey has to improve its position in the world human development ranking. Only then can the fertility rate increase to three. I recall an article from three years ago by Umberto Eco when I am talking about certain incidences. One passage of the article said that anyone who started watching Hamlet after the beginning of the second act would not be able to understand why Hamlet was being so rude to his uncle, who seemed to be a decent guy, but who had killed Hamlet’s father and married his mother in the first act. When writing on any issue, one should keep in mind that somebody might have missed the first act. I always keep this in mind. But I realized that the other day when I wrote about the first act, I neglected the possibility that some might also have missed the second one. So let me
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Confidence in the economy: increasing or declining?
Fatih Özatay, PhD
25 July 2013
Without confidence in the economy, people defer their investment decisions and wait for the fog to disperse even if there is access to loans and interest rate is at a reasonable level.
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How did the RJD outstrip the TCDD
Güven Sak, PhD
23 July 2013
While we are dealing with romantic staff in the Middle East, Russia is building a railway link through its territories between China and Europe. Some five years ago, an American friend of mine said to me, “I don’t understand why you concern yourself with the Middle East. The future of the world and Turkey passes through the Caucasus. You should instead monitor the Black Sea area. One who can find a cheap product transport route from the east to the west will eventually strike gold.” I was not sure what he was talking about then. Now I understand. Turkey has a large production hub in its east and a large market in its west. iPads and other popular electronic devices are produced in China and sold in European centers like Berlin, London, Paris, and Vienna. The route that will transfer iPads
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To be on the safe side
Fatih Özatay, PhD
23 July 2013
If the CBT raises its policy rate, this would mean it wants to keep interest rates at higher levels for at least a few quarters. It is a decisive moment for the Central Bank of Turkey (CBT). The Monetary Policy Committee convenes today. As those who keep tabs on will know, the CBT declares multiple interest rates. Three among these are of importance: the CBT’s overnight lending rate (the top-end of the interest rate corridor), the CBT’s overnight borrowing rate (the bottom-end of the interest rate corridor) and the policy rate within the corridor, i.e., the CBT’s weekly lending rate.
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Does “many” melt into “nothing”?
Fatih Özatay, PhD
20 July 2013
The construction frenzy might enable high growth rates over a certain timeframe. But this performance will in no way be sustainable. Is it possible to close the income gap with rich countries by turning the entire country in a construction site? If it were, a lot of countries would have made it to the league of rich countries by focusing solely on infrastructure. But there are only a few countries in the league. True, it took quite long to make it to there, but their success was built not on infrastructure investments alone. Of course it is important to build highways, rapid train lines, bridges, and dams. These are required to attain rapid growth and close up the income gap with rich countries. Unfortunately, as studies suggest, they are not sufficient alone to make to the group of high-i
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The EU is finally taking a tougher stance on Israeli settlements
Güven Sak, PhD
20 July 2013
Oslo is dead. Yet the temporary administrative structures of the Oslo Accords remain. The West Bank is about 5,400 square kilometers. It is still divided between districts A, B and C. Area A is the land under Palestinian Civilian and Security control. Area B is under Palestinian civilian governance but Israeli military control. Area C is under Israeli civilian and security control. There are about 2 million Palestinians and 500,000 Israeli settlers living in the West Bank. Life is hard for all Palestinians, but for the 150,000 of them living in area C, it is even harder. I was horrified when I first heard of this alphabet soup. It makes the place practically ungovernable. Which district are you in? Does the 1967 line coincide with the wall Israel built? How do you define a border
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