It would seem that the government is trying to pull a China. It's a sound strategy, but for the consequences for the common worker. Since government has refugees to feed into the machinery I assume they don't give a rats ass.
Central bank has lowered the interest rate. Mind-blowing stuff.
It is not a sound strategy at all. Doubly more so with this I/R decrease just done. I'll tell you what it really is a bit later.
A sound strategy needs sound core admin+bureaucratic acknowledgement of two things:
1) A=>B=>C type processes as far as the major bureaucrats involved vis a vis free market force leaders/reps (Whats best steered and whats best left alone)
2) Realising that tinkering (govt wise with govt levers) with C and leaving/entrenching both A and B "as is" (in a negative reform-deficit way) does nothing productive long term (and in fact can harm greatly) and must be eschewed in greater interest of the nation.
One can then visualise part (D) in chain as being the selective news reel the govt+proxies puts out.
Tinkering ratios and percentages is not what Deng's team (and subsequent CCP admin teams) did on first basis (it was done, but it was done simultaneously with A and B rather than ignoring those "underlying bases")
There was a solid approach to getting investment rates as high as possible and capital formation as high as possible in sectors that were known to be labour surplus + competitive in near absolute way for China.
Then and only then was there downstream tinkering in various ratios to keep things lubricated and provisioned.
What Turkey's govt is doing here is very much a shakedown in status quo to buffer up/maintain forex level at hand by any means they can (without upsetting too much i.e incrementalism).
Forex that they hope will tide the inflation from the import-reliant side at least. Also tide the loan crunch payments and other forex needs on horizon. Its reactionary "survival afloat mode" stuff in the end, not strategic plan. (and interest rate lowering just confirms it, as they likely wanted to do that come hell or high water, thus needing more forex to counter that effect).
Its all a thermometer reading of a fever if you look at some crucial numbers and things not being done.
Actually fundamentally changing the elasticities underlying entire swathes of economic activity (that determine export and import "responsiveness" to then harness to an export model of growth) needs huge chunk of investment (from local and foreign sources in researched competitive crucial areas) over 10 years that had transpired from 2010 - 2020 (for there to be a strategy now to shape further).
Something which did not happen.
Turkeys average fixed capital formation % (of GDP) that decade never went over 30% and is now around the 25% mark...and I wonder about the qualitative nature of even that % (given the FDI rate and other parameters).
When you are developing country, this is literally the fuel you are putting in the tank to sustain a journey. Every % counts.
China's case (during the formative bulking up of the 90s and 2000s)....one would have to really search to find a year where it dipped below 35%.
Can compare the two here:
Gross fixed capital formation (% of GDP) - Turkiye, China from The World Bank: Data
data.worldbank.org
Also even with the HK+Taiwan "round tripping" issue for FDI artificially bumping up that number, they still had good level of solid proven FDI quality and quantity.
I say this as no friend of CCP ....in fact quite the opposite---I just study the opponent very closely with all tools at my disposal (incl language).... and respect the things done correctly and well.
To become a exporting industrial power (Japan and South Korea saw these trends too in earlier years) one needs a GFCF of 35%+ for about 20 years..every % counts in end over these time periods and downstream time periods and baked cake etc.
This is a broad chunk of what (A) in the chain is all about.
It is why you have to build a pyramid base first, before you can build a pyramid top.
Little point making icing if you dont have a cake.
Can go on and on about this....but one more:
You have to bulk up and train, before you can punch hard and run flat out.
Purely C==>D stuff is just some light shadow boxing in end...will it get you into the ring that matters to unleash and prove stuff of note though?
It would be far more useful if Turkish govt has think tank white papers that it releases on its actual strategy (concerning A and then B), authored by people that know these things and with tools to wield within the bureaucracy and/or corporate sphere on it.
i.e papers that analyse thoroughly the make up of Turkish industry and economy....and the critical reasons as to what, where, how, when and crucially why there is an investment deficit.
Not academia (these end up being a dime a dozen... as well intended as they are in every country), but the govt. This is important.
I do not know Turkish and my understanding of Turkish economy is fairly shallow at best...so I do not really know about this stuff (underlying white paper output) like I do for some other countries.
But from the results of 2010 - 2020 (and the fairly "hot money" flow model of 2000-2010 that AKP employed then), I can say the A and B is probably not covered and analysed by AKP admin as it should be, as you would see lot more firing of bureaucrats (at all various different levels) that dont perform (w.r.t core part of A)...and hire better ones that do.
If the system is more heres the bunch of favoured bureaucrats (and political favours to divvy up and pay out) that we're stuck with and we just have to make do (and work every which other way except the hard way.... to try project success to electorate).....then you (or any country) are in trouble.
Members can think and figure out for themselves which one happens more for Turkey....or maybe some know where to find the best thinktank TR govt analysis of the country, strategy and itself....rather than news article feeds on what the govt wants you to focus on.
In which case I'm all eyes/ears if they are in English/translated.
In any case I have harped on about the GFCF to
@VCheng probably the most I know of anyone....here he can see its application to another country/perspective.
@tornadoss @Anmdt @xenon5434 @Sinan @UkroTurk 🚬 et al.