It seems that in Turkey it is impossible to do anything that is not somehow related to or connected with construction. But why?

Gittigidiyor.com is the pride of the Turkish Internet history. It will always be remembered as one of the pioneers. Launched in 2001, it was the first online auction and shopping website. In 2011, 93 percent of the company was sold to the American corporation Ebay. The site declared the sales price as $217.5 million, then a historic record for Turkey. Do you know what the founders of Gittigidiyor.com did with the money? According to a recent story in Sabah newspaper, they launched a construction company and bought one previously affiliated with Tekfen. It appears that the Zorlu Group is not an atypical example. When in Turkey, you do as the Turks do, just as when in Rome you do as the Romans do. It seems that in Turkey it is impossible to do anything that is somehow not related to or connected with construction. But why?

I will cite another example. I have to get it off my chest. About a year ago, I was chatting with a young Turkish entrepreneur within the context of the Global Entrepreneurship Program, GEP-Turkey, which we have been carrying out on behalf of the US State Department. After he had sold the tech company he had founded in the Silicon Valley, California, he had moved to Ankara. He had money. But rather than founding a technology company, he had chosen the door-window production business. He had thought it would be better to earn income in the existing conventional sectors than to try to make innovations. I recall our conversation whenever I think about how Turkey can switch to high-technology.

So, what is Turkey’s problem? Why do distinguished young members of  society who choose unknown paths and make innovations abroad prefer to walk the conventional paths in Turkey? Why do they spend the wealth they earned making inventions on common businesses?  Why do the businesspeople who make miracles abroad suddenly rust or tire young when they return to their home country? What is it that makes these young brains lose their spark?

Let me state a few findings. It is the investment climate of the respective country per se that causes entrepreneurs to lose their spirit. In Turkey, returns in low-technology fields are so great that no one considers making innovations or switching to high-technology areas. The impediments to high-technology production in Turkey are so great that it is practically impossible to make innovations. We have to see the issue as a systemic problem: when it comes to the investment climate, Turkey’s system is dysfunctional. Good intentions alone cannot get research and development done. Neither can it nourish the biotechnology sector. Unless Turkey provides a living space for biotechnology companies and systematic solutions to their problems, they will continue investing in Singapore and China. Meanwhile, Turkey will have to settle with the sales and marketing departments of biotechnology companies.

Second, the key issue is that alternative sectors provide remarkably higher returns and bear significantly lower risks. The 1990s was the decade of interest rent. The first decade of the 2000s was the decade of land rent.

Third, innovations cannot flourish unless the government lowers the alternative returns. Turkey has to introduce a stricter urban land use regulation and a land rent tax.

With the current rents, Turkey’s entrepreneurs will remain down and out. If the rulers who rose to power sticking to the “interest is illicit” principle of Islam come up with a system of unearned rent on land, the entrepreneurs of Turkey inevitably will switch to the construction sector. Turkey will fall behind and spend the next century in regret.

Just wanted to warn you again.

This commentary was published in Radikal daily on 22.03.2013