Turkey has been postponing the structural policy package since 2007. If they push harder, Turkey will become like Italy.

I am discontented with the short-termism that lately has been ruling in Turkey in all realms, including the economic policy design. A recently announced index was thought-provoking regarding  how Turkey should address issues. Today, I will talk about it and at the end you will agree.

Lately we have been focusing our attention on Europe. The deepening of the crisis there is naturally of particular concern to us. First things first: What is the meaning of the deepening crisis in Europe for Turkey? This marks the end of the “sustained Indian Summer” in Turkey by 2012. We will start experiencing the coldest times in winter, either suddenly, or gently and slowly. The Turkish economy will cool down rapidly or slowly. In such an environment, it is quite normal that we have been focusing on the European crisis. The administrators of Turkey principally are aware of the gravity of the issue. There hasn’t been a problem to this point. The matter of debate here is not the policy targets, but the actions planned to be taken so far to reach the targets. I believe that the existing framework is incorrect. Also, I think that it is wrong to adopt a short-term perspective oriented toward the deepening of the crisis in Europe when designing policy measures for 2012. This current approach will strengthen Dubai’s position as a business center against Istanbul. In fact, this is what happened between 2007 and 2011. A recent index highlights this point, as well.

The Global Venture Capital and Private Equity Country Attractiveness Index 2011 figures were announced recently. This index gives a score to each country within the 0-100 range. The index is generated using data compiled via a survey conducted with venture capital and private equity investors. The first study was announced in 2007; this is the second one. I think the results of the study reveal three points. The first is that Turkey has dropped from thirty-first place in 2007 to thirty-ninth in 2011. Turkey has been becoming less glamorous. The results do not fit the ongoing “leader country Turkey” claims. This is the first point to state.

And the second one:  Many countries in our region are ahead of Turkey in terms of attracting venture capital and private equity investors. Among these are the United Arab Emirates, Saudi Arabia, Jordan and Kuwait. This is also bad. In 2007, Turkey was ahead of all of those. By 2011, however, they have become more attractive than Turkey for venture capital and private equity investors. I, meanwhile, have been arguing on every occasion, “the Arab Spring will bring Turkey to the fore.” It appears that without a strong foundation, results cannot be obtained. A researcher actually came to the region and asked people, “Do you think Turkey is a key center to penetrate into the Middle Eastern and North African markets?” But words are insufficient to convince people; action is what is needed. The study is accessible at this link: http://blog.iese.edu/vcpeindex/ for those who want to learn some lessons. This is the second point.

The third is that, in the general ranking, Africa has climbed while East Europe has fallen compared to 2007. The study considers Turkey part of eastern Europe. So, we have a problem here. Turkey is still only a part of the European market. It somehow fails to come to the fore as the main road to the Middle Eastern and North African markets. Evidently, this is bad. But, is it bad to be a part of the European market, too? Of course not. Europe is the second most attractive region following the US for venture capital and private equity investors. What is the problem, then? The problem is that the entrepreneurial ecosystem in Turkey somehow has failed to catch up with that in Europe. This is the third point.

This is what I see in this picture: At this rate, Dubai and Abu Dhabi will outpace Istanbul, and Turkey will be left gazing after at the ship as it moves away.

Take a look at the proposed policy measures: paid military service and the sales of 2-B lands. What are these? These are made-up measures brought to the fore to set back the structural fiscal policy problems of the country. Turkey has been postponing the structural policy package since 2007. If they push harder, Turkey will become like Italy. Yes, it will.

This commentary was published in Radikal daily on 15.11.2011