Turkey needs bright people who will conduct seminal research, come up with innovations and hence pave the way for new businesses.

Can Turkey reverse the brain drain? Hardly. Can it lower unemployment rate to 7 percent permanently? Not, it cannot. 8 percent? Still difficult. So, what does the highway passing through the Middle East Technical University (METU) campus have to do with brain drain or unemployment rate? Let me tell you.

Last Tuesday US employment statistics were released. Unemployment rate in the US decreased to 7.2 percent. This raised a positive mood in the markets because the rate was not low enough for FED to initiate its feared action plan. Unemployment rate slightly below 6 percent is deemed “normal” rate of unemployment for the US. This level is too high for Japan, whose normal is around 4 percent. Both of these rates are abnormally low for Turkey, where the normal rate of unemployment is around 10 percent. For the timeframe since 1991, Germany’s normal rate of unemployment has stood on average at 8.3 percent; so their normal is somewhere between that of Turkey and that of the US. With the recent reformation efforts, the country seems to have lowered the normal rate of unemployment to 6 percent.

Low labor force participation rate

I don’t want to get you down right after the bayram, but numbers don’t lie and it’s not good news: as all economists know, unemployment rate is not the best indicator of labor market conditions. Under low labor force participation rate, unemployment rate might be artificially low. Employment rate that shows what percent of the working age population is actually employed is a better indicator of the utilization of productive capacity. In Turkey, the rate is quite low at 45 percent.

There are three lessons we have to learn from the top three economies in the world. First, 10 percent unemployment rate is not Turkey’s destiny. Yes, the cited are developed countries – in fact the top three in the world – and Turkey is a developing county. But there are countries in the first group which have unemployment rates as high as 8-9 percent, if not 10 percent, or, there are emerging countries which have lower rates. Second, when effort is made, the normal can be changed and unemployment rate can be decreased to a lower “normal.” Germany, for instance, seems to have accomplished this.

There is no doubt that for such efforts to pay, you need bright people capable of designing reforms. That’s not all. You need bright people who will conduct seminal research, come up with innovations, and hence pave the way for new businesses. These bright people will research and develop ideas so that Turkey can, say, improve export diversity towards higher-technology products and trigger employment. There is more. These bright people have to raise a bright and hardworking young population who is not afraid of questioning and investigating so that the chain is not broken.

Democracy and law
In METU, one of the best universities of Turkey, which admits bright people among the best of the best high school graduates of the country, a large number of trees were cut with a night raid without waiting for the legal procedures to be completed or the grounds for reconciliation were used, in order to build a highway. How do you think this will affect the bright students of METU? What will these young people think about the judicial system and the approach to democracy in Turkey? In short, what will they think about the livability in this country? Lately the media featured news on a planned new incentive system to reverse brain drain and reduce outmigration. This is important, of course. But how effective do you think such policy would be under the current perception of democracy and law in Turkey?

This commentary was published in Radikal daily on 24.10.2013