Turkey’s economic crisis not a foreign plot

Those in Turkey who believe Western powers, particularly the United States, are trying to undermine their country’s economic development, do not appear to have grasped the vast transformation the world economy has undergone in the last two decades.

President Recep Tayyip Erdoğan repeatedly blames foreign powers for the country’s economic downturns. In his latest tirade, he said on Friday that those who thought Turkey's economic problems were homegrown were unaware of the plots targeting the nation.

But looking at the top companies in the world’s leading economies from the 1970s to today, it becomes obvious that those countries require countries like Turkey to develop in order to prosper.

In the 1970s, in addition to energy giants like ExxonMobil, Texaco, and Gulf Oil, the top 10 companies in United States included General Motors, General Electric, Ford, Chrysler and ITT. Today, those companies are seen as the winners of the “old economy”.

When we look at the world’s 10 largest companies in terms of market capitalisation in 2018, we see that technology giants dominate the list.

World's top 10 companies - Statista
World's top 10 companies - Statista

ExxonMobil is now 10th, topped by Apple, Amazon, Google parent Alphabet, Microsoft and others. Warren Buffett's Berkshire Hathaway is a holding company that owns dozens of subsidiaries in the tech, insurance and food industries, while Tencent Holdings, which is based in China, and JP Morgan Chase are investment and financial service companies.

Changes in the composition of top companies also affects U.S. foreign policy as, compared to the old giants, the new winners’ clients are not states, but individuals. Today, Washington sees countries in the Middle East, and inevitably Turkey, not as clients in themselves, but as the states of client citizens. But those in Turkey who fail to grasp this important transformation keep on repeating an analysis of imperialism that explains the old economy.

Companies like Apple and Amazon need new markets where the people are wealthy enough to buy new mobile phones, laptops and software. U.S. foreign policy therefore seeks to establish the rule of law and property rights in developing countries, as those are crucial for sustainable economic development and consumer markets.

The Turkish Statistical Institute announced last week that Turkey’s economy contracted 2.6 percent annually in the first quarter of 2019, while it grew 1.3 percent in the three months to March from the fourth quarter of last year. The growth figures caught everyone’s attention as the economy was technically in recession after two-straight quarters of negative quarter-on-quarter growth in 2018.

But other important data were also released last week; the Istanbul Chamber of Industry’s 2018 top 500 industrial enterprises survey. Though growth figures are important for understanding whether the Turkish economy will manage to recover rapidly from recession, the composition of its list top companies is important to understand whether the country catching up, or has a chance to catch up with developed countries.

Top Turkish companies, 2018
Top Turkish companies, 2018

When you compare the 2018 list with the top industrial enterprises in Turkey 15 years ago, you see that the top 10 companies are to a large extent the same. More importantly, Turkey has no company in its top 10 that works in new technologies. All the important companies in Turkey date from the era of the old economy.

The picture indicates that even if Turkey solves its problems and again begins positive growth, it will remain a market for high technology firms as it is failing to adapt itself to the knowledge economy.

No foreign plot can explain Turkey’s failure, rather it is clear that catching up with developed countries today requires quality education and an environment that encourages innovation.

Looking at the country’s education system, as well as at the mindset of those ruling the country, it is obvious that Turkey is destined to remain rooted in the old economy.

The opinions expressed in this column are those of the author and do not necessarily reflect those of Ahval.