Archive

  • August 2019 (2)
  • July 2019 (2)
  • June 2019 (4)
  • May 2019 (6)
  • April 2019 (3)
  • March 2019 (4)
  • February 2019 (2)
  • January 2019 (1)
  • December 2018 (4)
  • November 2018 (3)
  • October 2018 (3)
  • September 2018 (3)

    Overpraising

    Fatih Özatay, PhD20 June 2013 - Okunma Sayısı: 1096

    If the economy grows as expected by 4 percent in 2013, per capita growth rate will be 2.7 percent, lowering the average of the 2204-2013 decade.

    In my last commentary I talked about average five-year per capita growth rates for each year since 1955. Let me give some more statistics. In the 2003-2007 period, the rate was significantly high, at 5.6 percent. This is the main reason underlying the “Turkey grew so fast” argument that has turned into blind faith. But it all demolishes when we look at the figures for the five-year period ending with 2012: per capita growth rate for the 2008-2012 period is 1.7 percent compared to the average since 1955 at 2.4 percent.

    The figure is for the first half of the “what a bright episode it was” period. But it appears that it was just a phase and it was temporary since growth rate fell below the 60-year average in the second half of this episode. Please highlight this temporary part and note that it was not unique to Turkey and was observed in many countries.

    Now let’s address the entire 2003-2012 period. Average per capita growth rate for the decade was 3.6 percent. There were other decades with higher growth averages. The 1963-1972 period is one, with 3.8 percent. Moreover, in each year in the 1971-1977 period, average growth calculated as the average of the preceding ten years was 3 percent or above. Rates declined after that period, however. The high-growth performance was not sustainable. If the economy grows as expected by 4 percent in 2013, per capita growth rate will be 2.7 percent, lowering the average of the 2204-2013 decade. This will be another example to the unsustainable high growth phenomenon.

    This unsustainability discussion that I have addressed previously as well is quite important. The “what a great episode it was” praises are said so frequently, so it is useful to present the economic performance referring to different figures. That Turkey broke growth records over the last decade has become so popular that even people who are critical of the government on other grounds first praise the economic triumph and then state their criticisms, in order not to be “disgraceful” I guess. Some of you might say that growth performance over the last decade was considerably high if it was not the highest since 1955. Actually, that’s exactly where I am trying to move the discussion. The growth rates I mentioned are left in the past. What matters is what is going to happen next. In fact, the weak growth performance in the last five years – actually six years if we take 2013 into account – gives clues about the future. But before reaching a conclusion, developments about determinant factors must be addressed anyway.

    I wrote a number of pieces on the determinant factors early this year. I compared Turkey with South Korea and the BRICs (Brazil, Russia, India and China). For the comparisons I focused on the prominent findings of studies that investigate why episodes of high growth prove temporary. The picture was underwhelming, as you might remember. First, Turkey has low investment rate. Moreover, maintaining that required a high current account due to the radically frail savings rate. More importantly, the ratio of population that has high school degree or more is significantly low. The quality of education, which is not considered in the comparisons, is not promising either. Third, related to the second, the share of high-technology exports is rather small.

    Please note that none of these problems can be solved overnight. Given this picture, I don’t believe that tomorrow will be better than today for Turkey, compared to other countries on the list. Of course the picture can be redrawn. Yet, there is no discourse to this end; all we have is overpraising. And second, it’s not achievable given the current level of polarization.

    This commentary was published in Radikal daily on 20.06.2013

    Tags: