Turkey’s coming decade

The Turkish economy has been performing well since 2002, bringing the gross domestic product per capita to more than $10,000, surmounting a very important psychological threshold. Direct foreign investments have also started to flow in after 2003, reaching levels never encountered in the history of the Republic. In 2005, the inflow was around $10 billion. Just for the sake of comparison, 1999 saw a total direct foreign investment of only $500 million, half of what Cuba received that year. In 2006, the inflow attained a record height of $20 billion and did even better in 2007 with $22 billion dollars, an all-time high.

Then came the 2008 global financial crisis with a very drastic decrease in foreign capital inflow, but two years later the inflow resumed, albeit at an average ceiling of $13 billion per year. The belated recovery of EU economies also played a negative role concerning this investment trend.

This year, the U.S. economy has been skyrocketing with an incredible growth of 5 percent. European economies still are not following basically due to very low growth results in the eurozone, which the austerity policy of Chancellor Angela Merkel of Germany should have ignited by now. However, in some previously bankrupt countries in the eurozone like Ireland, growth is back on the agenda. Ireland, due to its special ties with the U.S. and its serious restructuring of the economy has in fact achieved the result strongly predicted by the German ruling Christian Democrat Union of Germany (CDU) and Christian Social Union of Bavaria (CSU) representatives. Will it be good news for everyone?

It is not certain – unemployment figures are very sad in France and despite some small perceptible tossing up and growth, forecasts are not optimistic. This can change, especially through the Trans-Atlantic Free Trade Agreement (TAFTA), giving perhaps the EU economies a push to fulfil their potential growth.

The U.S., EU, Japan and South Korea are in fact joining forces in order to cope with the challenges of the 21st century. Turkey will certainly have to enter into this enormous free trade and investment market because it already enjoys a fully-fledged customs union with the EU and is on the verge of signing a free trade agreement with Japan. In coming years the capital influx among these most developed countries of the world will certainly increase exponentially.

That sounds like good news, but perhaps not for everyone because a large overhaul of dysfunctional economies whose growth is based on extensive borrowing will be necessary. Countries like Ireland, having successfully carried out heavy structural reforms, will certainly reap the benefits of this mammoth economic integration. On the other hand, countries like Greece, which have consistently delayed and sabotaged necessary reforms, which constantly complain about so-called international conspiracies, are going from one crisis to another, without the economic and distributive systems of their society being truly reformed.

What will be at stake in Turkey for the coming decade is simple: A continuing reform of infrastructure, distributive systems and more importantly, political stability. Steady governance capable of contemplating more than a single mandate will have to deal with a major restructuring of society. For the next decade Turkey should become a role model in terms of restructuring its administration and education systems in order to be able to cope with the coming challenges.