Shining like a star
Fatih Özatay, PhD
04 October 2011
The gap between per capita income in developed countries and in Turkey did not narrow down despite the 4.8 percent average growth. In his inauguration speech for the new legislative year, President Abdullah Gül stated an important point: If Turkey grows by 10 percent each year continuously until 2023; per capita income will reach 80 percent that of the European Union by then.
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“Help the rich, have mercy on them”
Güven Sak, PhD
04 October 2011
More than a century ago, Karl Marx said that socialism primarily is a reality of developed countries.
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Proposed solutions to reduce risks
Fatih Özatay, PhD
01 October 2011
IMF asks for the decisions declared after the summit on July 21st to be ratified completely.
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Ramallah to Bethlehem, how long?
Güven Sak, PhD
01 October 2011
Palestine could be the first Arab country to industrialize. The potential is there. Regarding capabilities, other than the skilled labor force, Israeli infrastructure is ironically an important asset. Israel is one of the two industrialized countries in the region, the other being Turkey. Theoretically, Palestinians should have no problems connecting to the world. Logistics infrastructure, together with the road network and ports, is right there, next door. Or that, at least, could be the verdict of a naive economist who looks at the investment climate from a distance. Has he ever tried travelling from Ramallah to Bethlehem? That makes a difference. It allows you to understand the frustration of the Palestinian business community. It can also put into perspective the membership
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A country that gives credit to banditry cannot improve its value added
Güven Sak, PhD
30 September 2011
Turkey cannot improve its domestic value added unless solid applicable steps are taken about intellectual property rights. What is the similarity between Turkey and China? “Our growth performance, obviously” is not the answer. There is no similarity in that regard. I believe that Turkey can compare to China with respect to low value added. Take the iPod production in China, for instance. We used to listen to music with cassettes on our Walkmans. Now it is the era of iPods and online audio downloads. According to one study, China sells iPods for 150 USD each. Out of this amount, the value added of Chinese workers is only 4 USD. That is, the value added is substantially low. An iPad also involves components with high value added, but those are imported. Is the issue any different in Turkey?
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Deepening pessimism of the IMF, and Turkey
Fatih Özatay, PhD
29 September 2011
How should Turkey respond if the risks the IMF highlighted become reality? First it is necessary to stress one point: The Turkish economy will be sound and safe if the crisis in the European Union does not spread further but go back to the “abeyance” phase witnessed before August and no more bad news are heard from the US.
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Europe’s solution is Turkey’s problem
Güven Sak, PhD
27 September 2011
The recapitalization of banks in Europe will sharpen the competition over the temporary savings surplus and increase the cost of these resources for Turkey. Europe needs to introduce serious measures, one way or another. Either the European Union will lead the process directly and resolve the problem or a resolution will emerge automatically through banks, the credit ratings of which are being lowered one after another. In any case, renowned European banks will have to obtain capital support from some channel. The way things have been evolving is apparent. By European banks I do not refer solely to the banks of the Union member states. It appears that Sweden and others also are involved. So, what will happen to Turkey if European banks start strengthening their capital structure? Let’s see
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An assessment of the IMF's recommendations
Fatih Özatay, PhD
27 September 2011
Turkey does not have the chance to put price stability on the back burner or give such impression. Now it is time to assess the policy recommendations of the IMF for Turkey. The IMF maintains that Turkey needs to tighten its fiscal policy given the current milieu signified by a substantially high current account deficit and the resultant increase in the foreign exchange (FX) requirement increasingly met via short-term borrowing. To this end, it recommends the tightening of the budget excluding transient revenues. I have stated this recommendation several times before. It would have been useful to act like a “foresighted businessman” when circumstances were suitable, particularly during 2010 and the first half of 2011. Now, however, uncertainties are high and Turkey might face a weak growth
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IMF marches to a different tune regarding the monetary policy
Fatih Özatay, PhD
24 September 2011
The IMF does not agree with the CBT though its gives their due. The IMF announced the preliminary conclusions of the 2011 Article IV Consultation report on Turkey on Thursday. The report is composed of three sections. The first section reviews the period after the global crisis and the second section highlights the challenges created by the post-crisis developments. The last section sets forth the economic policies recommended by the IMF. The main topic of today’s commentary will be those monetary and fiscal policy recommendations the IMF made.
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Does Turkey accept refugees from Somalia now?
Güven Sak, PhD
24 September 2011
Not that I know of. Prime Minister Recep Tayyip Erdoğan was in New York yesterday, speaking to the U.N. General Assembly. He described the poverty he saw in Somalia and said he considered the situation there a disgrace to the international community. Somalia is definitely in a horrific state. But Turkey does not accept permanent asylum seekers from Somalia, nor, for that matter, from Iran, Iraq or Afghanistan. Turkey is one of the few countries in the world that continues to apply the geographical restriction of the 1951 Geneva Convention. Many immigrants who do make it here live and work illegally. As Turkey grows into a beacon of stability, prosperity and liberty in the region, it urgently needs to adopt a coherent immigration policy. Speaking of Somalia’s plight in any other
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