Erdoğan's visit to Seoul and a comparison

Published 03.05.2018 22:06

Why was President Recep Tayyip Erdoğan in South Korea only a very short time before the elections? I do not know whether this question has ever been asked; however, it was high time for this visit.

Considering Turkey's relations with Uzbekistan and South Korea in the context of the New Silk Road and the quest for new currency and trade systems, Erdoğan's visit to South Korea, after Uzbekistan, both has boosted the significance of the historical visit to South Korea and explains the reason behind its timing.

Thanks to Turkey's deployment of soldiers to the Korean War in 1950, which was the first hot conflict of the Cold War, Turkish-Korean relations mainly remained on the level of political friendship, with the economic dimension remaining in the background.

In fact, South Korea's accelerated and increased economic activity both after the civil war in the 1950s and during the entire Cold War period was an important practice that needed to be followed by Turkey. Unfortunately, however, this development path, which is a rare experience and success of a developing country, was no more than a subject of academic curiosity for Turkey. South Korea's development settled on a unique line in the 1970s and came to the fore even further as a global development experience after the financial subversion in the 1990s. Turkey should have watched this development on a practical level as well. Why Turkey could not do this is another question for political debate.

Turkey will hold historic presidential elections after a short while and certainly rebuild its economic policy and its instruments. Given this historic threshold, both South Korea's experience as a whole and the economic aspect of Erdoğan's visit are crucial.

Nowadays, Turkey is discussing the dollar exchange rate, budget and inflation data again. Certainly, however, much of the economic data do not come out as a result of the basic macro trends of the economy in such periods. A wrong but reversible bureaucratic decision or the exaggerated operation of a notorious rating agency might drag much data to undesired points. We must confess that wrong decisions might be made in such periods; however, these can be reversed and compensated for. From this point of view, I must say that exchange rate pricing in Turkey is exaggerated at the moment. Soon, the Central Bank of the Republic of Turkey (CBRT) will take more fundamental measures, and as promised, it will "simplify" its monetary policy.

With the new system, even if it is late, Turkey will rapidly do what South Korea did as of the 1990s under Erdoğan's leadership. Certainly, this is a unique path for Turkey that will allow it to be more competitive and evaluate its resources on the highest level. With this new technology-intensive path, which is based on exports and industry, the state will not abstain from making true and deep market regulations even on companies individually. It will come into play with the new presidential system. The South Korean presidential system achieved it under Pacific conditions.

Protecting industrialists in Turkey was perceived as protecting them from external competition. In this regard, industrialists have never been industrialists in a real sense. And the production of goods for the uncompetitive domestic market was well below global standards during the long inward-oriented industrialization period - by the end of the 1970s.

Throughout this period, South Korea carried out a very active land reform, ensured education-industry cooperation, allocated an extraordinary budget for education and disciplined even small and medium size enterprises (SMEs) under global competition conditions.

More importantly, however, the state closely watched large automobile and technology companies that are quite familiar to us today, determined the areas where they would invest and where they would be specialized, making it unwritten but official in these areas.

The banking system also kept pace with this and placed credits accordingly. The areas where each of them will invest and grow were determined from the beginning. Besides, South Korea built a financial structure and capital entry architecture that would support this industry. For instance, the Korea Credit Guarantee Fund (KODIT), similar to Turkey's Credit Guarantee Fund (CGF), has been one of the determinative official financial institutions in South Korea for the past 30 years.

Today, Turkey has much greater advantages than South Korea because of its younger and dynamic population and better company balances in terms of exports and the domestic market. For instance, the biggest disadvantage facing South Korean enterprises today is their export-dependent structuring and economy settled on a balance where economy largely depends on exports. Turkey's new capital structure is more dynamic than South Korea's. Also, some large monopolies in South Korea have become too big to move. Turkey has much stronger advantage of sources and market.

Depending on all this, I observed during Erdoğan's visit that South Korean companies have a very high appetite to invest in Turkey. Therefore, it appears that South Korea will soon make better use of Turkey's advantages, while Turkey will further bring up South Korea's unique development model for the sake of its own development path.

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