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North vs. South Korea - Eastern vs. Western Turkey? 26/12/2011 - Viewed 4574 times

When I heard about the death knell of North Korean leader Kim Jong, it took me a second to even remember that there was a country named North Korea. 25 million people apparently live in this country. We in Turkey are naturally interested in South Korea, located in the southern part of the Korean Peninsula with a population of 49 million people. We admire that country’s economic performance over the past few decades and compare it to that of Turkey.

But as North Korea has been a current issue for the world this week, I decided to compare Turkey with the Korean Peninsula as a whole. The two Koreas were divided in 1945, and I came up with a remarkably different comparison to Turkey when I put them together.

If we put North and South Korea together we get a country of 73.8 million, which is roughly the same as Turkey. The US$ 21,000 per capita income of this United Korea would be 45 percent of that of the US. Turkey’s per capita income at US$ 15,000 stands at 32 percent to that of the US.

The different economic structures and regimes in North and South Korea caused a huge income gap, where the per capita income of the South is seventeen times that of the North. In Turkey, on the other hand, the income gap between the richest and the poorest region is only 4.2 times. The figure below shows the per capita income in proportion to the US for different regions of Turkey. Let’s look at the bright side this time. Although Turkey lags behind Korea on average, Istanbul is richer than United Korea. Van-Muş-Bitlis-Hakkari (TRB2), the poorest provinces of Turkey, are on average three times richer than North Korea.

Figure – Per capita income in North Korea, South Korea, Korea, Turkey, Istanbul and Van-Muş-Bitlis-Hakkari Region In Proportion to US, by PPP, 2008[1]

Source: TURKSTAT, the World Bank, the CIA World Factbook and my own calculations

But let’s for a second leave Korea’s problems to the Koreans and take a closer look at Turkey. As we all know, chief among Turkey’s problems is regional disparity in development. A simple solution would be to make sure everyone becomes as rich as an average resident of Istanbul. To this end, we must either make everyone move to Istanbul and find a job there, or offer the economic environment in Istanbul in all cities of Turkey. I am not sure whether the government has a strategy for this, but current practices and their outcomes reveal that we are in between two strategies. In my previous commentaries, I argued that it would be unfair if our beautiful city of Istanbul grew further and that Turkey’s priority must be creating new centers for growth. This time, I want to elaborate on this and present my three observations.

Can Istanbul grow further? Yes, it can. The table below shows data on the 20 largest metropolitan cities of the world with respect to population. It gives the share of each city in the total population of its respective country and the current growth of its population compared to 1980. Istanbul ranks fourteenth in the world. Twenty-one percent of Turkey’s urban population lives in Istanbul, and the city’s population has grown 2.4 times over since 1980. Tokyo, the largest city of the world, hosts 36 million people, corresponding to 42 percent of total Japan’s population. Buenos Aires, in eighth place, has 35 percent of Argentina’s population. The population density of Paris is similar to that of Istanbul despite France’s reputation for centralism. In South Korea, 25 percent of the population resides in Soeul.

Industrial policy must be in harmony with Istanbul’s plan for the future. Every country has different strategies of concentration according to its specific context. I just want to hear Turkey’s strategy in this respect. I want our statesmen to declare whether they are expecting Istanbul to grow into Tokyo or Paris. If we are going to make a Tokyo out of Istanbul, for example, we have to concentrate our limited energy on manufacturing domestic elevators or subway wagons rather than on domestic automobiles. After all, Istanbul could manage such population density only with 25-50 storey buildings, not with its current five-floor landscape. Vertical growth requires elevators, not cars.

If Istanbul is not going to be like Tokyo, foreign policy is the most critical tool to ensure development in the east. If we are seeking to maintain the population density in Istanbul at around 20-25 percent as it is in Paris, we have to come up with serious solutions to the development challenges in the rest of the country. In terms of economic geography, eastern Turkey is shut down, like a dead-end-street, as described by professor İlhan Tekeli. That makes it similar to North Korea in terms of the economy and connectivity. Therefore, Turkey has to make the investments necessary to connect this dead-end street to its western markets, as well as world markets. It also needs to improve its Eastern parts’ integration with other countries. One key function of the “zero problem with neighbors” policy is to reduce the east-west disparity in Turkey and thereby disburden Istanbul. Enhancing trade between the eastern region of Turkey and Armenia, Iran, Iraq and Syria is the cheapest way to lower regional income disparities. An alternative option is to construct a highway between Hakkari and Istanbul, but I am not sure whether the public debt stock could shoulder this burden.

In conclusion, although the regional income disparity in Turkey is remarkably high in comparison to European countries, the gap between eastern and western Turkey is much smaller than the gap between North and South Korea. Istanbul is more prosperous than Korea. It will be useful if the policy debates in the period ahead assume a perspective that focuses either on moving the eastern population to Istanbul and enabling vertical growth in there, or duplicating Istanbul‘s ecosystem and connectivity level in the eastern regions of Turkey. We must keep in mind that, if we let things slide, Istanbul may very well end up like other cities on the list such as Bombay, Dhaka, Karachi, or Lagos.

Table: 20 Largest Metropols of the World, Population in Proportion to Total Urban Population, 2009 /1980 Population Ratio of the Metropolitan City

Source: World Bank Development Indicators

Esen Çağlar, TEPAV Economic Policy Analyst, http://www.tepav.org.tr/en/ekibimiz/s/1025/Esen+Caglar

[1] Accessing data on North Korea is as hard as accessing data on Turkey’s cities. However, CIA Factbook provides per capita income figures on North Korea by purchasing power parity. For Turkey, the TURKSTAT database provides per capita income figures at the NUTS-II level while data on regional per capita income by purchasing power parity are not available. For comparison purposes, I assumed that purchasing power parity was constant throughout Turkey. Relaxing this assumption, it is possible to say that the income gap between Istanbul and Hakkari can decrease further. I would like to see TURKSTAT go beyond the Statistical Institute of North Korea so that I will not need to rely on assumptions.