If the investment climate puts a country’s entrepreneurs down and out, that country cannot make the leap to prosperity.

This is what I have been occupied with lately:  Forty decades ago, the average life expectancy of a baby born in Turkey who was one year old was 23 years less than that of a Swedish baby. Since that time, the difference has been reduced to eight years.  At the same time, the life expectancy in Turkey has risen from 50 to 74 years meanwhile.

It is true that life expectancy in Sweden four decades ago was higher than what it is in Turkey today, but the gap has decreased a significant degree. Comparison of GDP per capita, however, tells a different story. Four decades ago, Turkey’s GDP per capita was 10 percent of Sweden’s. By the end of 2010, the rate has barely increased, to 16 percent. We live almost as long as the Swedes do, but we are not as prosperous as they are. The convergence is rapid in one dimension and slow in another. Why? If you are wondering what I think, please read on.

Let me ask the billion-dollar question once again: why if the gap in life expectancy between Sweden and Turkey has been narrowing down rapidly does the income gap remain intact? It’s a no brainer: life expectancy has been increasing regardless of the decisions and policies of administrations, while prosperity requires concrete decisions in concrete policy areas. This is why the convergence is much slower in GDP per capita than in life expectancy. Let me point at the difference between the two states, that is, what is the automatic result of technological change and what requires state-driven intervention and management. I think the case at hand is a good example of what Turkey should expect concerning the middle-income trap. When compared to Sweden, the problem of Turkey is the distorted investment climate, which has to do with bad governance.

Advances in health technologies have changed our lives. They increase our life expectancy to begin with. Four decades ago, the life expectancy in Sweden was 75 years. Today it is 82. Age-related diseases such as Alzheimer were not in our vocabulary until recently. All we knew was that you go senile when you get older, but we did not know about types of age-related diseases. Not anymore. Today, fields termed with the prefix “bio” are quite popular among engineers, which is evidently related to the prolongation of lives worldwide. When my generation reaches the limits of life expectancy, we probably will know how to cure diseases the names of which we did not know until recently. The quality of our lives at the limit of life expectancy will be better than  that of the previous generation. All thanks to technological advancement. Technological change is becoming more democratized and the benefits of the technology are becoming more widespread every day. Technological change comes to each and every country whether you like or not. In the present day, I think that the increase in life expectancy automatically affects us all. This is what statistics tell: life expectancy has been growing everywhere simultaneously.

Life expectancy increases ipso facto with technological change, but prosperity does not. Using the correct ingredients does not guarantee a delicious pie. In the same way, the combination of technology, investment, and labor does not automatically bring prosperity. No country can prosper without conducive investment climate. If the investment climate puts a country’s entrepreneurs down and out, that country cannot make the leap to prosperity. If you pay peanuts, you get monkeys. If your education system is mediocre, so will be your GDP per capita. A smart economic policy framework is crucial for the creation of wealth. This is what is lacking in Turkey.

This commentary was published in Radikal daily on 02.04.2013