By Hisham Ezz El-Arab
Just a decade ago, Turkey was on the edge of state bankruptcy. The political system was paralysed, and the Istanbul stock market had crashed. The price of cars and computers rose 50 per cent and hundreds of thousands lost their jobs.
Since then, during a decade of rule by the Justice and Development Party, the Turkish
economy has tripled in size. They have weathered the global financial crisis of 2008 better than most.
Now, the Turkish are looking ahead to 2023, the hundredth anniversary of their republic, and working collectively to boost exports to $500 billion, increase the share of renewable energy sources by up to a third, and make Turkey one of the ten largest economies in the world. All of these goals would have once been unthinkable.
As an Egyptian living and doing business in Turkey for the last three years, I have often thought of my own quickly-changing country while I watch this success story. I have seen the excitement and hard work shown by Turkish businessmen as they work to grow their national economy. In the meantime, I’ve read the many analysts and commentators, who suggest the so-called Turkish Model might be a guide for Egypt’s ongoing transition. But what are the actual lessons Turkey can teach a newly democratic Egypt? Can we too become an economic leader?
We must first understand that what happened in Turkey was not a miracle. Turkey’s leaders were not magicians or rocket scientists. Instead, policies enacted over the course of decades set the stage for later growth.
It began with the leadership of Turgut Ozal in the 1980’s. As prime minister and then president, Ozal encouraged privatisation and liberalised the economy. He concentrated on supporting export-based industries. He introduced flexible exchange rates, maintained positive, real interest rates, tightly controlled the money supply, and eliminated most subsidies. All of these privatising measures were aimed, in part, to attract foreign investment.
The results were gradual but massive. Merchandise exports grew from $2.3 billion in 1979 to $8.3 billion in 1985. Turkey’s credit ratings climbed. Foreign investors took notice.
Ozal and his successors wanted to make sure that all of Turkey, not only the major cities, benefited from this growth. He used tax incentives and land subsidies in order to attract investment to regions far from Istanbul and Ankara. Regions typically known only for agriculture continued to export tobacco, cotton, grain, olives, and hazelnuts, but now they were home to factories producing textiles, automobiles and electronics.
At the helm were a group of conservative businessmen from central Turkey, dubbed the Anatolian Tigers, who took the initiative presented by Ozal’s policies and rose as economic leaders in new industrial cities like Gebze and Tuzla. Decades later, they formed the social and economic foundation of the Justice and Development Party (AKP).
The seeds of Turkey’s success can be planted in Egypt. Like Turkey, Egypt is a bridge between the markets and consumers of Europe and Asia. We also have a massive labour force, spread out far from the capital, eager for the employment opportunities that result from decentralised investment.
What can we learn from the Turkish story? There are two types of lessons: specific policies and broader matters of perspective.
Like Turkey, we should further liberalise, privatise, and enter the global economy, improving our infrastructure in order to increase our capacity to produce. The Turkish government has invested heavily in roads, railways and ports in the last decade, nearly doubling the number of multilane roads. By 2023, they aim to build 11,000 km of new railway lines, 15,000 km of divided highway, one of the world’s ten largest ports, and new unmanned aerial vehicles and satellites. We should look at these big goals and realise that in order to attract investment and grow our economy we will need to invest in infrastructure.
The Turkish government encourages investment by subsidising quality certifications and up to 75 per cent of the costs of export fairs abroad and sends businessmen on the international trips of political leaders. They take care of workers with minimum wages and other regulations and give low-interest loans to small and medium enterprises. We should also be looking to encourage this kind of economic growth. We should work with the European Union and other international organisations in order to emerge as a global economic player and an appealing place for international investment.
Keeping in mind how important the Anatolian Tigers were to the Turkish economy’s growth, we should encourage decentralisation and the emergence of entrepreneurs throughout the country, in Port Said, Aswan, the Delta and Sinai. As in Turkey, these outlying entrepreneurs will eventually become political actors, increasing the plurality of perspectives as we debate our foreign and domestic policies.
We can encourage their emergence with a strategy of regionalisation. In Turkey, each region has its own budget and its own development plans. Major Turkish companies invest in lesser-known cities with unemployment issues like Diyarbakir because the government offers free land, subsidised energy, and tax exemptions on revenues. We should be thinking along similar lines.
Turkey’s Vision 2023 involves specific targets for each industry and empowers business associations to work as mediators between the government and private industry. One of these organisations, the Independent Industrialists and Businessmen’s Association (MUSIAD), is a non-governmental, non-profit, and voluntary-based association established in 1990 by five industrialists and businessmen.
Today, they have around 5000 members, representing more than 15,000 companies that invest overall $5 billion per year and contribute $17 billion to Turkey’s export revenue. They work hand-in-hand with the government to meet Turkey’s national economic goals. We should emulate this model and empower our business associations.
The other lessons to take from Turkey are more about attitude. Turkey has been successful because the Turkish people are confident and have leaders who work with representatives of the IMF and European Union as equals.
They see themselves as serious players and producers in the global economy, rather than exporters of raw resources to advanced economies. Turkish people buy Turkish products, and are proud of what their country has produced, rather than looking to the US and Europe for their tastes in manufactured goods and household items.
Turkey charges high customs for imported brands and Turkish companies have built their brands by offering longer warranties, better customer service and the latest technologies. As a result, Turkey has the second and third biggest LCD screen factories in the world, in Vestel and Arcelik.
More important than any of the specifics is the fact that Turkey has a vision. They look ahead to the future. We should do the same too. We should work together towards a common future, building not destroying, looking forward not backward. Now, with the new state, the time is ripe for us to steer ahead. What are our goals? Where do we want to be in 2030 or even in 2052, the hundredth anniversary of our republic?
Hisham Ezz El-Arab is the Marketing Director of Danone and he lives in Istanbul, Turkey.