Güven Sak, PhD - [Archive]

Which size is it? 12/11/2010 - Viewed 1286 times

Here in Turkey, we are obsessed with size. 'Mine beats yours' style has always been popular in this territory.

Here in Turkey, we are obsessed with size. 'Mine beats yours' style has always been popular in this territory. And size of Turkey's economy is also a matter for similar debate. According to this, there is a numeral target to make Turkey the tenth biggest economy of the world.  Are you aware of this debate or have you ever assessed its possibility? Do you think Turkey could be the tenth biggest economy of the world? Who are the rivals in this competition? If the target is that assertive, why does the medium term plan not have an enthusing perspective on this matter? Or is it the opposition again that prevents the setting of such perspective? Today let me get the obsession on 'Which size is whose?' started. Though all the questions cannot be handled today, I would like to highlight three striking points for now.

Let me talk about the first ideas evoked in my mind when I took a look at the table keeping the above questions in mind. The table shows the ranking of the biggest economies of the world as of 2009. The figures are taken from the most recent data announced by the IMF. Turkey ranks the seventeenth with its GDP of US$614 billion. In fact, Turkey was at the 25^th place in 1980. This corresponds to an improvement by eight places. Reforms made under the rule of Turgut Ozal, Customs Union, macroeconomic stability and political stability came in useful. Turkey became the seventeenth biggest economy of the world. As of today, the country at the tenth place is Canada. Between Canada and Turkey are a number of countries involving India, Russia, Australia and Korea. And the mentioned task is quite hard to accomplish. This is the first point to highlight.

The second point we should keep in mind is the profound gap in the ranking. You might be misinterpreting the situation seeing China challenging the USA; but the size of China's economy is just one fourth of US's economy wherever you look at it. China's performance is astonishing; but the size of its economy is less astonishing. Let us skip the quality of the production and just examine the net figures. Recently, official rating agency of China downgraded the ranking of US and US Treasury bills. But the picture is clear: US bills are still the most valuable bills in the world to invest in. Investors are still willing to lend to the US at 4 percent with thirty years of maturity. This would be an issue to recognize in the middle of the G20 talks and the second point to highlight today.

GDP of US at the first place is US$14 trillion whereas Turkey's GDP is around US$6 billion. Another basis for comparison: the bailout package the Congress approved after the bankruptcy of Lehman Brothers was US$780 billion; bigger than Turkey's GDP in 2009. And the package recently announced by the Federal Reserve equals Turkey's national income. Please recall that the FED recently announced they will purchase US government debt security worth US$600 billion. It is just that. When you sum up the defense and foreign policy expenditures in highly debated US budget, you also get a figure around US$600 billion. It is correct that US and Turkey, as we have been bragging about, have the same foreign policy agenda. Nonetheless, they support this agenda with an annual budget that is equal to Turkey's GDP. And this is the third point to keep in mind.

Do you see how much thought numbers evoke?

This commentary was published in Radikal daily on 12.11.2010