The picture is quite clear for Turkey: it cannot sustain the recent economic performance unless the mentioned conditions change.

This is the last commentary of the series which compared the BRICs (Brazil, Russia, India and China), Turkey and South Korea in terms of major economic indicators. Here are the results:

1. The snapshot of the performances shows that Korea, which had the same GDP per capita as Turkey in the early 1980s, now has a distinct position. Indeed, the country has made it to the league of high-income. Russia has the highest GDP per capita among the BRICs and is followed by Brazil and China. India is left behind, while Turkey is posited between Russia and Brazil.

2. Korea leads the group also concerning the development performance in last decade or so. Korea’s GDP per capita in proportion to that of US has increased by 18.3 percentage points from 2000 to 2012. Korea is followed closely by Russia (13.8 percentage points) and China (11.6 percentage points). Turkey ranks fourth with a gain of 7.5 percentage points compared to GDP per capita of the US. Over the same period, Brazil and India have increased their GDP per capita in proportion to US by 3.4 percentage points each.

3. Concerning the recent era, the GDP growth rates of Russia and China are likely to enable convergence in the medium- to long-term. Turkey’s performance is fine while Brazil and India are not promising.

4. Nevertheless, past performances are not necessarily sustained. I cited a couple of studies on this issue. These revealed two critical factors to sustain high growth rates: mean years of schooling of adults at or above secondary school and the share of high-technology products in exports. Russia comes to the fore in terms of education and China in terms of high-technology exports. Russia’s high-technology export performance is also satisfactory. On the other hand, Turkey performs weakly compared to BRICs countries as well as to South Korea.

5. Low domestic savings rate is a key factor that hinders GDP per capita growth. We’d better put China and its outstanding domestic savings rate aside; it is questionable whether such a high rate is desirable. Korea and India also have impressive savings rates. These are followed closely by Russia. Brazil and Turkey have radically low savings rates: Turkey’s is less than half of Russia’s. Interestingly, Turkey’s savings rate recently has fallen below that of Brazil, which is already quite low.

6. I cannot speculate on the performance of other countries. I just want to reiterate a clear fact on Brazil’s economy: the country is not performing well and it is quite likely that the BRICs will lose their B soon.

7. The picture is also quite clear for Turkey: it cannot sustain the recent economic performance unless the above conditions change. What is more, as the second item above suggests, Turkey’s convergence performance is rather weak as it raised Turkey’s GDP per capita only to 30 percent of that of the US as of 2012.

Given this picture, I’d better return to the growth phenomenon soon. I will address the issue as much as the economic agenda allows me to.

This commentary was published in Radikal daily on 22.01.2013