According to the World Bank, Turkey’s performance since 2000 has been impressive. Macroeconomic and fiscal stability were at the heart of its performance, enabling increased employment and incomes and making Turkey an upper-middle-income country with around USD9000 per capita. Poverty incidence halved over 2002–12, and extreme poverty fell even faster. During this time, Turkey urbanized dramatically, opened up to foreign trade and finance, harmonized many laws and regulations with European Union (EU) standards, and greatly expanded access to public services.
Ethiopia also achieved notable economic progress in those years. Its double digit growth since 2003 helped the country reduce absolute poverty significantly. It also managed to mobilize a large sum of domestic resource to self finance huge development projects.
Although the two countries are at apparently different levels of development, there are commonalities in their success stories.
EBR’s Tinbete Ermyas visited Istanbul, Turkey’s major economic hub, two times in the past three months and reflects how Ethiopia can learn from Turkey’s way of development.
I recently had the pleasure of visiting Istanbul, Turkey as part of a group of journalists invited to tour the city and see its various sites. Undoubtedly, the trip was a choreographed display to show off the country after a coup attempt nearly overthrew the current government last summer.
Still, as a journalist and someone who has thought a lot about economic development since coming to Addis Ababa from the United States about three years ago, I came away with a great appreciation for Turkey and what it can offer in the way of lessons in development.
Immediately, I was impressed by the beauty and charm of the city – from the majestic Bosporus Strait to the endless array of side streets and alleyways that are lined with cafes, restaurants, stores and small businesses. Everywhere you go you get the sense that Turkey is open for business, literally and figuratively.
To be sure, the two countries are in drastically different places economically. While Ethiopia has enjoyed robust gross domestic product (GDP) growth since 2003, its development is still quite fragile and in its infancy. Turkey, on the other hand, has one of the largest economies in the world – currently ranked 17th in purchasing power parity and 18th in nominal GDP, according to the World Bank.
The differences between a G20 nation with decades of strong growth and a country whose rapid development is relatively recent cannot be overstated.
However, the longer I spent in the country, the more it became apparent that Turkey and Ethiopia share a lot of cultural and historic similarities that have macroeconomic implications. Both countries are home to government’s that recently faced some level of political instability. The two countries are in regions that are known for their tumult and subsequent refugee crises (in fact, they house some of the largest populations of refugees in the world).
What’s more, each country boasts a flagship airline, providing services that help bolster trade and tourism. And perhaps most notably, both are lauded by multilateral organisations for their promising economic development prospects – and have been key regional allies of the United States, especially in the ‘war on terror’.
One central question, however, is what have they done differently in their development trajectory? And, perhaps more importantly, how can countries like Ethiopia replicate some of their success?
The answer, in part, is the creation of a level playing field in the private sector development through the creation of skilled human resources.
Research shows that the relative ease with which entrepreneurs are able to open businesses, grow them and contribute to the economy is central to the country’s rich consumer culture, one that has promoted rich development. This has helped the private sector – at all levels – flourish, creating job opportunities and allowing the economy to grow and meet the needs of consumers.
What most impressed me about Turkey’s economy was the fact that it felt distinctly Turkish. Everywhere you go – whether it is a small local business or a huge, multinational corporation with outlets in Turkey (think Starbucks or McDonald’s), had consumers in mind.
The idea of Turks-as-Consumers has had seemingly positive effects. Take the media world, for example. Anumber of international media outlets – CNN and the BBC; Vogue, InStyle, and GQ magazines, among others – each has a Turkish version. These are media entities with their own editorial staff, thereby creating economic opportunities and contributing to a more robust media and cultural environment – all because research demonstrates the Turkish government was deliberate in developing the human resources of the country.
According to the Organisation for Economic Cooperation and Development (OECD), the ability to develop a labour force within a country is crucial to strengthening the consumer base and, by extension, the overall economy: “Skills development is crucial to the growth and sustainability of all developing economies. Not only is it related to resolving youth unemployment problems, it enhances the profitability and operability of the market.”
The OECD says what Turkey did right was enacting “policies to increase private sector participation in skills design and delivery.” This meant, in part, filling demand gaps in the job market through “identifying the lack of skilled labour [in the market]… nationwide public-private university partnerships… [and the] use of idle capacity.”
This engendered a culture in which young people began to understand themselves as future workers: In tangible ways, like through vocational training, and through developing soft skills that are critical for the “changing business world”.
Ethiopia can learn from this model – developing education and skills to empower young people as they enter the working world, encouraging them to gain employment in a number of fields, accrue wealth, save money, invest and consume goods that can spur overall growth.
Of course, Turkey is facing its fair share of economic and political problems. Economists have called this, among other things, the “middle income trap”, which The Economist says is “the difficulty encountered when countries that have recently emerged from poverty try to move up into the club of rich countries.” As a result, smaller firms have suffered, according to the article, and larger businesses with connections to the government are more likely to flourish at the expense of developing newer ones.
There is a lesson to be learned here: creating a level of fair, equitable economic development begins with educating and developing the skills of the work force, but doesn’t just end there. It requires robust, well-thought policies that allow for fairer access to the economy. EBR
5th Year • January 16 2017 – February 15 2017 • No. 47