Making things even harder for entrepreneurs, Turkey is now at the dawn of a new process that will further reduce its horizon.

Last week I noted that Turkey is in contact with only a small part of the world. Let me continue from there. Lately, I have been curious about the diameter of the area in which different countries are active. From this perspective, it seems that Turkey is the country with the shortest average export reach. It is sort of the country with the shallowest breath in the world, if you ask me. Figures reveal that Turkey is not very active outside of its borders. This is indeed what I meant when I said that Turkey is in contact with only a small part of the world. But the story does not end there. Turkey is not only the country with the shallowest breath in the world; this condition has become increasingly severe in the last decade as its export reach has not increased, but decreased. On this occasion, let me clear up a misunderstanding here, that Turkey has necessarily headed towards the Middle Eastern market because the European crisis has not expanded its reach in exports. This has not been the case in Israel, which is indeed a small country, or in Korea, or India. We may exclude Brazil, which is reaping the rewards of its rich supply of natural resources. We may also count out China. So may we the gigantic developed countries. Even with these exceptions Turkey’s horizons for doing business and its average reach in exports are limited. That’s what the figures say. Before talking about the reasons, let me emphasize my concern here. I believe that this is a significant problem that shortens Turkey’s horizon.

Turkey’s export partners we all know. It is also easy to identify their distance from Turkey. So, we can calculate Turkey’s average export reach. Weighing the distance of export partners with the share of that country in total exports, we can in a way estimate the diameter of the area of export activity. Exchange rates are also involved in the calculation. Basic, but it gives an idea. According to this, Turkey’s export reach was 2,846 kilometers as of 2011. Korea’s was almost twice: 6,184 kilometers. Israel’s was 5,678 kilometers. Brazil’s was more than 10,000 kilometers. Don’t give me excuses. From my perspective, in the race in international trade Turkey’s breath is hardly half of that of its competitors. Short reach, short sight. Countries that have a strong export reach have better knowledge of what the world is like. What do you think Turkey’s average export reach in 2000 was?  It was 3,324 kilometers. Turkey’s already narrow horizon has shrunk further over the last decade.

Why has Turkey not been able to expand its area of interest beyond its neighboring countries? Why has it not been able to build commercial relations with countries beyond the Middle East and the Atlantic? Because it lacks the institutional capacity to do more. Just take a look at the current trade practices. Turkey exports on forward payment, but pays for its imports with cash in advance. Turkey’s exporters undertake all the risks; its trade partners suffer none. Willing buyer, willing seller. It’s only the Turkish exporters who lose sleep. Turkey has not been able to build a better trade infrastructure in the last thirty years. Why is that? If your export goods are ordinary and unsophisticated, it will be the buyer who has the strong hand. Why? First, because your industrial policy is just rhetoric. Second, since exporters undertake all the risks, they refrain from entering new countries where doing business or entry into markets is harder. They hesitate to go beyond the convenient European market, the business practices of which are familiar. Third, the foreign trade support system cannot expand to cover markets apart from the settled European market. Turkey does not have any political risk insurance or state support for difficult markets in place. If you are stranded, there is no one who will come to the rescue. Life is hard for Turkey’s entrepreneurs.

Making things even harder for them, Turkey is now at the dawn of a new process that will further shorten its horizon. I don’t think this is wise. What is ethical for individuals is not necessarily wise for countries. Turkey’s romantic involvement with its surrounding geography is bad for its economy. Does this bring no economic benefits? It might, in a century or so, but for today, this has no use.

This commentary was published in Radikal daily on 27.08.2013