| Lütfü KÜÇÜK | |
| Chairman of the Board of TUGIAD |
|
Growth |
Within this framework, we, as TUGIAD, wanted to share our analysis, evaluations and proposals about the economic growth in Turkey.
1. Turkey must have a growth strategy
It is seen that Turkey doesn’t have a medium-long term growth strategy. There are yearly numeric targets about growth, but the tools to be used to reach these targets are not clear and determining. As a matter of fact, every year a growth target of 5% is set but we either exceed or remain below this target. Therefore, the aimed targets become mere forecasts.
2. Turkey must have a manageable growth
The fluctuations of the economic growth show that the growth in Turkey is not manageable. In other words, Turkey can’t fully control its economic growth. As there are no comprehensive and clear policies applied in relation to the expenses side such domestic and foreign demands and revenue side such as industry, agriculture and services, the growth is shaped by uncontrolled internal and external dynamics.
3. The growth in Turkey depends on external resources
Turkey’s rapid and sustainable growth depends mainly on external resources (i.e., foreign savings). Domestic savings are not big enough to ensure the growth. That’s why external resources must be used. As the entry of external resources can’t be foreseen or have limits, the growth is limited too. There are no adequate policies to increase and to use domestic savings.
4. Growth – employment relationship has weakened
The capacity of the growth in turkey to create employment becomes more and more weak. As thee is no growth strategy, the employment capacity created by the growth can’t be clearly foreseen. The existing growth is far from satisfying the employment need created by the demographic load and migration pressure. The rigid structure of the labor market, the transformation of companies toward a capital-intensive structure to create competitive capabilities and the incompatibility between the nature of the work force and the demand for labor also create extra problems. That’s why it is not possible to create sufficient employment while the economy grows.
5. The growth depends on importation
Turkey imports more and more to ensure economic growth. The investment goods and energy dependency to outside issues can’t be solved in short term. Therefore, as the growth rate increases, the importation of investment goods and energy also increase. The obligation of the manufacturers to us cheaper imported intermediate goods due to overrated New Turkish Lira creates a closer relationship between growth and importation. More importation is made for a bigger growth and consequently, no sufficient domestic added value can be created despite the rapid growth.
6. The problems of the industry becomes heavier with the growth
The growth of Turkey’s economy is driven by the industry. The growth of the industry, especially in relation with the exportation accelerates the economic growth. But the problems of the industry become more and more heavy. The investment, production and competition conditions are actually not favorable for the industry. Input costs, namely electricity, oil and raw material costs are ever increasing. Profitability decreases in all industry branches. The industry weakens as the driver of the growth and can’t profit from the growth driven by it.
Consequently, Turkey needs a “manageable” growth that can balance the pressure of the importation and the domestic consumption. Turkey should cease to evaluate its economic growth merely with numerical data and define and implement a manageable growth strategy. This growth strategy must be an “industry-based” strategy, that relies on domestic savings (internal resources, local production), focuses on exportation, creates employment and more competitive thanks to new supports.
Not every growth is a healthy one.
