Why Turkey is Thriving
I disagree with the premise of Jeffrey Sachs’s commentary. In fact, Turkey is not thriving.
While my challenging Jeff, as he told me to call him when I was his teaching assistant at Harvard University, risks putting an amateur lightweight against a heavyweight champion, I cannot resist the urge to correct the several misconceptions in the article. And, when it comes to Turkey, I have a home-court advantage.
For example, the decline in inequality that Sachs cites has been rather modest. The key to the ruling Justice and Development Party’s success has been the growing middle class, who have increased their income at the expense of both the richest and the poorest and whose purchasing power has risen significantly thanks to macroeconomic stability and falling interest rates.
Likewise, while it is true that exports are “increasingly headed south and east to the emerging economies, rather than west to high-income markets,” the technological content of the country’s exports is falling. Many Turkish economists link the two, arguing that these new markets in the Middle East, North Africa, and Asia demand less sophisticated products.
To be sure, Sachs has not gotten it all wrong. Although he does not dwell on the lack of structural reforms, economic vulnerabilities, or the housing boom, he is right that Turkey’s success has been built on fixing the banks. But I am shocked that he praises Turkey’s innovation and education, which have actually been found to be major constraints on investment.
Sachs is the latest in a spate of celebrities, such as the actor Russell Crowe, who have recently declared their love for Turkey, or at least for Istanbul. I think that this is simply because more and more people are going is tin poli (“to the city”). Istanbul is now sixth in the MasterCard Index of Global Destination Cities, which ranks cities by total international visitor arrivals and spending.
Interestingly, tourists’ perceptions of Istanbul – and, more generally, of Turkey – are vastly different from those of many locals. A recent Pew survey found Turks to be very pessimistic about the near future. While we Turks are a gloomy bunch, this pessimism is not unfounded; Turkey also ranked last in the OECD Better Life Index, which was released the same day that Sachs’ article was published.
Many short-term visitors never see Istanbul’s ugly side. Their hotel is conveniently located away from the maddening traffic. They would not be aware of the latest alcohol bans. They would not get tear-gassed. They encounter only the most educated Turks. And, once the government delivers the finance arbitration that it has promised, they will think that Turkish courts are very efficient.
Such duplicity also exists in Dubai, which had, along with Istanbul, the highest arrivals-growth rate in the MasterCard index. Perhaps because I write columns in English, I feel more like I am in colonial India, sahib.
The original comment, with corresponding graphs and links, can be read here: http://www.hurriyetdailynews.com/why-turkey-is-not-thriving.aspx?pageID=449&nID=47915&NewsCatID=430"