The extended crisis on the continent will structuralize Turkey's problem. Are you aware?

A group of countries becomes distinguished from others when you examine the growth and foreign trade figures for the post-crisis era. The group is led by China and includes Brazil, Argentina and Peru. We already are familiar with the Chinese phenomenon, but what does a series of Latin American countries have to do on this list? Turkey lags behind Latin American countries by a narrow margin concerning its growth performance and by a long shot concerning its foreign trade performance. Why is that so? Let us take a look at it. Today let me underline some trends in foreign trade I have observed for those who are squeezed within meaningless political analysis.

Let me enumerate some points without wasting time. The Latin American countries on the list are actually suppliers to China. Their extraordinary trade performance is closely associated with China's growth performance. It appears that China revives its trade partners, particularly the raw material exporters. This is the first point.

The second point is that according to the United Nations' database, in 2000, 55 percent of Latin America's total exports were delivered to the USA whereas the ratio decreased to 32 percent in 2009. It is not only the structure of the exports that has changed; the structure of the imports has also changed.

The third point is related to the changing structure of exports and imports of the Latin American countries. Approximately 85 percent of Brazil's exports to China are constituted of natural resources. The ratio stood at 68 percent in 2000. The exports of Brazil, an industrial country, to China are constituted predominantly of natural resources. On the other hand, China exports industrial goods, including automobiles to Brazil. In figures, 98 percent of China's exports to Brazil are composed of industrial goods. Why? Lula's reforms in Brazil saved approximately 20 million people from poverty. There now appears a growing middle class which demand cheap Chinese cars. This is exactly what the Brazilian President in a visit to Beijing called an "imbalance" last month. Brazil also wants to sell industrial goods to China.

However, the trade between the USA and Latin America does not reflect a neo-colonial picture. Brazilian Embraer produces aircrafts. The country has the organizational capacity to assemble hundreds of thousands of components to produce an aircraft. Embraer exports aircrafts to the US. Also, it uses US technology to produce the aircrafts. Similarly, intercompany transactions constitute 80 percent of Mexico's exports. US firms use Mexico in a way as a sub-industry zone. This is the fourth point to stress.

Here comes the last one: Diversification of a country's exports evidently is a good thing. It is important to produce ordinary goods as much as sophisticated goods. The US is a country which can make production within a wide spectrum from the most ordinary to the most sophisticated goods. Product diversification is evidence of the broadness of the economic capabilities set of a country. Just like the ecological systems which host numerous species from tiger to zebra, from willow tree to olive tree, a healthy economic system enables product diversification. You can improve the product diversity if you master the complete skills set from the least to the most complicated. However, the US market is an indispensible and invaluable opportunity for Latin American countries since the latter can sell medium- and high-technology goods only to the former.

This is exactly why the European Union market is indispensible and irreplaceable for Turkey. If Turkey has high-technology exports, it is because of Europe. If Turkey is to advance in this area, it will be because of Europe. More time is needed to improve the sophistication of the Middle Eastern and African consumption baskets.

Europe is a matter of existence for Turkey. The extended crisis on the continent, therefore, will structuralize Turkey's problem. Are you aware?

This commentary was published in Radikal daily on 31.05.2011