2013-06-13 11:19:32
Erdogan’s Crackdown Could Drive Away Economy’s Saviors
Prime Minister Recep Tayyip Erdogan returned to Turkey last week little chastened by the protesters occupying the central squares of cities around the country. Judging by his demand that the “vandalism and utter lawlessness” end immediately, he may yet choose to crush them.
He can if he tries. In the process, though, he would badly damage the country’s economic prospects. We’re not just talking about the recent sharp fall on the Istanbul stock market and a bump of more than a percentage point in the yield on 10-year government bonds. These problems will pass.
We’re talking instead about the economy’s medium-term health, which depends more on the success of the middle-class Twitter generation now squatting in Taksim Square than on the construction boom that triggered the protests. In that respect, sending back in the riot police would be a big mistake.
For all of Erdogan’s success in boosting growth, Turkey needs a new business model. Otherwise, it won’t escape the so-called middle income trap that stalls many emerging economies when they reach per capita gross domestic product of about $10,000. True, Turkey’s per capita GDP has almost tripled since Erdogan came to power in 2003, to $10,500 at the end of last year. Yet that figure has barely increased since 2008, and growth itself fell to 2.2 percent last year, from a spectacular 8.8 percent in 2011.
To change that picture, Turkey needs young, educated, technology-savvy Turks to produce high value-added companies. In other words, Erdogan should be helping the 20-somethings in Taksim Square to start software businesses, not tear-gassing them into leaving the country for better prospects elsewhere.
Περισσότερα Bloomberg
InfoGnomon
Prime Minister Recep Tayyip Erdogan returned to Turkey last week little chastened by the protesters occupying the central squares of cities around the country. Judging by his demand that the “vandalism and utter lawlessness” end immediately, he may yet choose to crush them.
He can if he tries. In the process, though, he would badly damage the country’s economic prospects. We’re not just talking about the recent sharp fall on the Istanbul stock market and a bump of more than a percentage point in the yield on 10-year government bonds. These problems will pass.
We’re talking instead about the economy’s medium-term health, which depends more on the success of the middle-class Twitter generation now squatting in Taksim Square than on the construction boom that triggered the protests. In that respect, sending back in the riot police would be a big mistake.
For all of Erdogan’s success in boosting growth, Turkey needs a new business model. Otherwise, it won’t escape the so-called middle income trap that stalls many emerging economies when they reach per capita gross domestic product of about $10,000. True, Turkey’s per capita GDP has almost tripled since Erdogan came to power in 2003, to $10,500 at the end of last year. Yet that figure has barely increased since 2008, and growth itself fell to 2.2 percent last year, from a spectacular 8.8 percent in 2011.
To change that picture, Turkey needs young, educated, technology-savvy Turks to produce high value-added companies. In other words, Erdogan should be helping the 20-somethings in Taksim Square to start software businesses, not tear-gassing them into leaving the country for better prospects elsewhere.
Περισσότερα Bloomberg
InfoGnomon
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