Seeing as its International Women's Day today, Hurriyet Daily News economics columnist Emre Deliveli uses the occasion to remind readers that the labor force participation (LFP) rate for women in Turkey is a woeful 29.5 percent (the average among countries that are part of the Organization for Economic Co-operation and Development, which Turkey is a member of, is 61 percent).
Improving the visibility and participation of women in the workplace has certainly been one of the areas where the current Turkish government has failed to take any strong action. The most recent World Economic Forum Gender Gap Index, for example, finds Turkey ranked 124 out of 135 countries. Beyond the low LFP rate for women, Turkey also has extremely low numbers of women in senior and managerial positions in government and academia.
Still, despite the discouraging numbers, things may be changing. From a recent article by Guven Sak, executive director of the Ankara-based Economic Policy Research Foundation of Turkey:
Ankara has released the latest figures for Turkish-Iranian trade and they have yielded one very interesting statistic: in the last five months, three quarters of Turkey's gold exports have gone next door to Iran. Reports Today's Zaman:
Data from the Turkish Statistics Institute (TurkStat) have shown that Turkey exported gold worth $4.02 billion in the first five months of 2012, with $3.08 billion of that sum exported to Iran. This means Turkey’s gold exports to Iran have increased roughly eightfold compared to the same period in 2011. It is speculated Iranians are turning to gold as a method of saving as Western sanctions tighten.
The mass purchase of Turkey’s gold is being undertaken by rich Iranian families living in Turkey. These families largely do business in the fields of construction and iron and steel production. There are rumors that they purchase Turkish gold via third persons in order not to be noticed, and that they entrust the purchased gold to the Central Bank of the Islamic Republic of Iran (CBI), again via third persons. The CBI supports the purchases in order to gain strength in the face of increasing sanctions from European countries.
Rich Iranians may be turning to Turkish gold as a kind of safe haven, but the Financial Times' "Beyondbrics" blog suggests something else is going on. From the FT:
So what’s going on?
In a nutshell – sanctions and oil.
In recent months, western powers, notably the US and the European Union, have tightened financial sanctions on the Islamic regime in an attempt to force Iran to scale back or halt its efforts to enrich uranium.
In March, Iran was cut off from from Swift, the global payments network, effectively blocking the country from performing any international financial transactions.
Rather than as an investment opportunity, Turkey's currency used to best known for the number of zeros that could be found on lira bills, with the most common denomination note being 1,000,000. Even today, some seven years after the government introduced a "new" lira that did away with all the zeroes, it's not hard to find Turkish shopkeepers who occasionally still give prices in the millions.
Today's lira is a different beast. Turkey, having tamed the hyperinflation that created all those zeros in the first place, now has one of the world's fastest-growing economies and a currency that has earned some respect and, as of today, a new symbol to help it distinguish itself globally. From a report in Today's Zaman:
The Central Bank of Turkey unveiled a currency sign for Turkish lira, reflecting the government's ambitions to further strengthen the lira as a global currency and to boost the country's standing as a major international actor.
The symbol is a double-crossed "L," shaped like an anchor. The anchor shape hopes to convey that the currency is a "safe harbor" while the upward facing lines represent its rising prestige, Prime Minister Recep Tayyip Erdoğan said at a ceremony at the Central Bank unveiling the symbol.
The World Economic Forum's annual Global Gender Gap study was released this week and contains mostly sobering numbers regarding the status of women in Turkish political and economic life. Turkey's position in the study -- at 122 out of 135 countries surveyed -- was up slightly compared to last year, when the country came in at 126. Still, the ranking places Turkey in between Syria and Egypt and well below several of its other neighbors. Looking at the study's trend lines, while women's political participation in Turkey has been slowly inching up over the last several years, their participation in economic life has been slowly eroding.
The full study can be found here. A previous post on the status of women in Turkish political and economic life can be found here.
Although Turkey has no international car brand of its own, the country is no stranger to the automotive industry. Ford, Fiat, Renault and several other international car companies, for example, have significant plants in Turkey (Ford's successful Transit Connect minivan is made in a plant on the outskirts of Istanbul).
But it appears that Turkey is starting to get serious about becoming an even bigger player in the car market. Bloomberg today reports that Brightwell Holding BV, a Turkish private equity firm, is considering buying up Sweden's troubled Saab, which recently went belly up. From Bloomberg:
“We will make a bid very shortly, there’s no question,” Zamier Ahmed, a board member of the Istanbul-based group, said today in a phone interview.
Brightwell, which invests in energy, transport and technology, wants to buy all of the Trollhaettan-based carmaker and plans to keep production in Sweden, Ahmed said from London. His firm is in discussions with the administrators overseeing Saab’s bankruptcy as well as with Saab Chief Executive Officer Victor Muller, Ahmed said.
Saab, owned by Zeewolde, Netherlands-based manufacturer Swedish Automobile NV (SWAN), filed for bankruptcy on Dec. 19 after running out of cash. Production at the plant in Trollhaettan stood still for most of last year starting in March. The company can emerge from bankruptcy if a viable bidder comes along, Muller said last month.
Brightwell will need at least two weeks before submitting any offer as it’s still evaluating Saab’s assets, including inventories, to decide how much to pay, Ahmed said.
Up until the Arab Spring spilled over so violently into Syria, the rapprochement with Damascus could have been considered one of the great successes of Ankara's outreach to its neighbors. But Turkey-Syria relations have deteriorated as rapidly as the situation inside Syria has, leaving Ankara with some very difficult policy choices, among the most prominent ones being how to deal with the issue of sanctions against the Assad regime. Ankara has suggested for weeks now that it will roll out a host of sanctions aimed at the Damascus regime, but has yet to make the details public. (Turkish Foreign Minister Ahmet Davutoglu today said sanctions would soon be announced, after he holds consultations with Prime Minister Recep Tayyip Erdogan, who is recovering from a recent operation. More details here.) (UPDATE- Ankara Wednesday unveiled its new sanctions program, which includes a freeze on certain Syrian assets in Turkey and a hold on dealing with Syria's Central Bank, among other measures. Details here.)
The issue is, of course, a political one. But for Turkey, which uses Syria as an important trade route and whose imports to the country have boomed in recent years, the sanctions issue is also very much an economic one. In a recent piece in The National, analyst Henri Barkey, says Ankara's hesitation regarding Syria sanctions is strongly influenced by economic concerns:
The last decade has seen the Turkish economy grow at record and world-leading rates and show a remarkable immunity to the financial and economic ills that have gripped the economies of many other countries. But with the Eurozone crisis coming right up to its borders, can Turkey's economy -- which is heavily dependent on trade with Europe -- avoid being impacted by the economic troubles to its west? Not very likely says Daron Acemoglu, a well-known Massachusetts Institute of Technology economist, in an interview with the Hurriyet Daily News. From the interview:
The eurozone debt crisis has turned the European economy into “a ticking time bomb” that lies at Turkey’s door, according to a top economist who has been ranked among the most influential thinkers of our time.
Speaking to the Hürriyet Daily News in an interview last week, Daron Acemoğlu, a professor at the Massachusetts Institute of Technology (MIT), also urged the Turkish Central Bank to raise interest rates from their current historic lows.
“The European time bomb lies at the door for Turkey,” Acemoğlu said. “The Turkish economy is closely connected to the European economy. Thus, it is open to all possible shocks.”
Regarding the possibility of a new global recession, Acemoğlu put the chance as high as 50 percent. “If there is a new recession in Europe, Turkey would go back to experience 2009 once again,” he said, a year when the Turkish economy contracted by 4.7 percent.
Despite the positive effects of economic reforms, Turkey should “increase interest rates” in order to put the brakes on strong domestic demand, Acemoğlu said, adding that such a move would provide the policy flexibility that would be necessary following a possible shock from the eurozone.
Statistics released today show that Turkey's economy grew 11 percent this past quarter, making it the world's fastest growing economy.
But the good news could be tempered by increasing concerns that the economy is also overheating and relying too much on domestic demand. From the Wall Street Journal:
The growth figures came as Turkstat simultaneously published figures confirming that Turkey's foreign trade deficit—the key driver of its mushrooming current-account gap—widened to $10.06 billion on the year in May, significantly above analysts' expectations and reaffirming market concerns that Turkey's rapidly growing economy is imbalanced.
Turkish stocks listed on Istanbul's main share index gained 0.3% on the data, before falling into negative territory. The lira, the poorest performing emerging-market currency in 2011, also quickly fell into negative territory against the dollar after initially strengthening modestly on the news.
Economists said the numbers showed that Turkey's economy continued to fire on all cylinders, but they underlined that the central bank's policy failed to slow growth.
"Bunker-busting numbers these; the Turkish economy is absolutely booming, making it the Eurasian Tiger," said Timothy Ash, emerging-market economist at RBS in London. "More worrying, though, was the trade data [that were] also released, which showed a record high—or thereabouts—trade deficit for May. Absolutely no sign that the economy is slowing [and] responding to the CBRT's unorthodox policy response."
The Centre for Economics and Foreign Policy Studies (EDAM), a Turkish think tank, has just released a very interesting paper that looks at the benefits and costs of Turkey's ambitious economic goals, which aim to have the country among the world's top ten by 2023, and places them in a global context. The paper, written by Prof. Jean-Pierre Lehmann, takes a close look at the potential social costs of the kind of growth Turkey would need to reach its goals. From his paper:
Turkey is a middle-income country. Still, with 8.2% of the population living on less than $2 a day and 27% below the national poverty line, clearly Turks stand to benefit considerably from growth – so long of course as the fruits of growth are shared with the poor.
And that is one of the many nubs of growth. The process of growth has its downsides and the outcomes are by no means obviously equitable.
On an occasion of visiting a chip factory in Korea in the mid-1980s, I was told that the young female workers (aged 16 to 19) worked 14 hours a day, 28 days a month. This comes to roughly 98 hours a week – considerably more than the working hours in Turkey which range, I am told, from 49 to 59 per week.
The point is this: no country has succeeded in achieving growth without exploiting its workforce and polluting the atmosphere. In many cases, there has also been widespread destruction of nature. Japan’s high economic growth during the “miracle years” resulted in possibly the worse case ever of mercury poisoning, causing what became known as the Minamata disease; while the pristine beauty of the Inland Sea (among other sites I was fortunate to visit before the “miracle”), which had served as a source of inspiration for generations of Japanese poets, was forever destroyed for future generations by the installation of petro-chemical plants.
The drama over the selection process for the next generation New York city taxi has not ended.
As reported earlier in this blog, the contender put forward by Turkish carmaker Karsan was recently rejected in favor of a model made by Nissan. One of the reasons given for turning the Turkish option down was Karsan's "inexperience," with Mayor Michael Bloomberg reportedly saying he was worried Karsan's model wouldn't hold up in New York.
Now Jak Nahum, Karsan's top executive and a fixture of Turkey's automotive industry for decade, is striking back, saying it's Bloomberg who may be inexperienced, at least when it comes to his knowledge of the Turkish automotive sector.
“This is very unfortunate on his behalf. He has not been thoroughly informed about us," Nahum said during a recent visit to New York. "Today, Turkey is among Europe’s most important car manufacturing centers. Investments are gradually increasing and the sector is showing sound growth. Our production infrastructure has been rewarded many times."