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    Why have exporters become hotel keepers?

    Güven Sak, PhD07 February 2014 - Okunma Sayısı: 1208

    If you are wondering what has happened in Turkey over the last five years, take a look at the employment statistics. Turkey’s labor force is employed as manual workers in construction.

    When I was born in the early 1960s, 30 percent of Turkey’s population lived in cities and ten percent had refrigerators in their homes. My dad told me that they had bought a refrigerator after I was born, to keep milk fresh. The brand was AEG. I used it as a student in Ankara in the 1990s. Arçelik had opened its first factory only a couple of years before. Turkey’s industry was newly emerging.

    In fact, Turkey’s industrialization is a real success story. Turkey switched from a lazy agricultural economy to a dynamic industrial one in three decades. In the early 1980s, Turkey’s exports were worth $3 billion, 90 percent of which were agricultural products. Today export volume has exceeded $130 billion, and industrial products constitute 90 percent of this amount. Thanks to the European Union, Turkey became a medium-tech, industrial economy within three decades. Meanwhile, industrial activity expanded from the large cities towards Anatolia. Industrialization across Anatolia brought visibility to a number of secondary cities.

    Later, something happened and Turkey started to procrastinate. It got the illusion that pouring concrete onto every piece of empty land in the name of urban transformation counted as economic policy. It became drunk with the success of the Mass Housing Administration, TOKİ. It thought that that the economy was on track. Then it realized that the value added gains of the newly industrialized Anatolian cities were negative. The gain previously had been ensured via the switch from the low-productivity agricultural sector to the higher-productivity industrial sector. Between 2004 and 2011, however, a different trend emerged. According to the TURKSTAT figures, a shift occurred from industry to lower-productivity activities, including services and construction.

    If you are wondering what has happened in Turkey over the last five years, take a look at the employment statistics. Turkey’s labor force is employed as manual workers in construction. Between 2008 and 2013, employment in the construction sector increased by 57 percent. The sector raised its share in total employment by 17.5 percent, while the share of industry declined by 10 percent. Second to the construction sector in job creation was the services sector, which created less than half as many jobs on an annual basis. And the performance of the industrial sector is not even worth mentioning. This all happened between 2008 and 2012. I have been asking you for a reason what the deal was with this last period.

    Some of you might say, “What else could a population of seventh-grade dropouts do other then work in constructions?” That’s true. But please note that in the early 1980s, Turkey’s population was composed of third-grade dropouts. Turgut Bey accomplished the bright industrialization performance of that era despite this. Today, the population is composed of seventh-grade dropouts. Yet the administration has not been able to repeat Turgut Bey’s success. What could be the leading industrial sector of a country that thinks pouring concrete everywhere and buying and selling flats bring prosperity, and which has a seventh-grade dropout population? The iron and steel industry at best. Turkey’s leading industry produces rebar! Is it possible to enhance export sophistication by producing rebar? Is it possible to secure sustainable wealth production? No.

    So, here comes the billion-dollar question: Turkey has become a medium-tech industrial country thanks to the EU and the customs union. It has enjoyed the demands of the most sophisticated and advanced market in the world and the subsequent industrial transfer. Then, why has the demand pool at Turkey’s elbow not enabled the emergence of high-tech industry in the country? I think it is our fault. I think the mistake is in Ankara. Why is the best business option for an industrialist from Anatolia, who has earned wealth exporting industrial goods to Europe, to open a Hilton Hotel? The problem involves the investment climate in Turkey, not the industrialists. It appears that there is a limit to the development of a country that is unable to train engineers, condemns mathematicians to under-qualified jobs in private training institutions, and has a dysfunctional court system. I have a lot more to say; but I am not sure that it won’t go in vain.

    Our tradition has taught us to count no man happy until he dies. Ignoring tradition does no good. Turkey has a great deal of work to do.


    This commentary was published in Radikal daily on 07.02.2014

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