The Turkish Disease
The Economist coined the term “Dutch Disease” in 1977 to describe the decline of the manufacturing sector in Holland after the discovery of large North Sea natural gas deposits in 1959.
Here is the opening sentence of my latest Hurriyet Daily News (HDN) column, where I introduce the Turkish Disease, which is a variant of the Dutch Disease. Basically, the construction sector is crowding out manufacturing in Turkey, but you can read the whole thing at the HDN website.
The column would ring bells to anyone living in Istanbul, but even someone who has been to the city for the first time cannot help but notice the construction boom on the way from the airport to her hotel. There are other interesting indicators as well: For example, I watched the new Tom Cruise movie Oblivion a couple of weeks ago. Turkish movie theaters are notorious for showing too many commercials, and since I had the idea for this column then, I decided to count the total number of commercials and the real estate ones: Roughly 2/3 were about real estate, mostly about your new dream home, but there were a couple of office buildings as well. Of course, construction magnate Ali Agaoglu, whom I affectionately see as the Turkish Zuckerberg (or at least 50 percent of him), had a spot as well- I’d be surprised if he didn’t. Speaking of Oblivion, I’d have to agree with economist Tyler Cowen that it is one of the most visually stunning movies I’ve ever seen. He has an interesting interpretation of the movie as well– I never thought of it like that while watching, but it does make sense when you think about it- HINT: It starts with science, or at least part of it, ends with paleontology, or at least part of it:):):)
OK back to serious matters: The supply-demand gap I mention towards the end of the column has been around for a couple of years, and I discussed it in a column last year, if you are interested. I think I have to stop now, as it is almost midnight now, and I am getting rather sleepy…
4 Responses to “The Turkish Disease”
As you know, Emre, I have always considered Turkey – whatever mistakes – to have better leadership and smarter policies than Greece, where the political class has completely bankrupted and ruined the country but is still in charge as a quasi hereditary aristocracy.
Your point on construction crowding out the rest of the Turkish economy, however, I find extremely worrisome because of the Greek failure path. Indeed, construction in Greece has been the top object of private investment for years against a declining productive base. EU entry and Eurozone created a construction bubble. The construction industry in Greece is the biggest, strongest poltical lobby. The current government attempt to start up these construction projects in Greece is to try to return to the 'status quo ante' because this lubricates the political system.
None of this does anything to cure the cancer and economic gangrene in Greece, but then Greece is like an opium addict, a zombie living on EU tranfer money and deperately trying to get the next instalment without considering the long term consequences. For that reason, Greek youth are leaving with their feet for a better life and future abroad. The Greek political class lives in its own looking glass world….
Hope that Turkey has better prospects than that!
Turkish bubble suits better than Turkish disease, because the problem is from inside.
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