The Turkish Republic celebrated its 90th anniversary this week and there is clearly a lot to celebrate.
During the past few decades, Turkey has achieved some impressive development breakthroughs that many countries would envy. Turkish people can expect to live 10 years longer today than in 1990, and they enjoy universal health coverage established through the 2003 Health Transformation Program.
Turkey’s energy sector has attracted billions in private investment and focused on renewable energy as a key element of a greener growth path. And Turkey has learned from the devastating effects of the 1999 Marmara Earthquake and improved its capacity to anticipate, mitigate and respond to the risks of natural disasters.
Since 2001, the size of Turkey’s economy has tripled and Turkey now ranks as the sixth largest economy in Europe. Turkey’s success in making sure the benefits of economic growth are shared is equally noteworthy with poverty falling and some 4.5 million jobs being created in the past four years alone. Turkey’s growing middle class is both an attractive market and an important voice for inclusive economic development and the consolidation of Turkey’s democracy.
I arrived in Turkey this week to learn more about the country’s success – and also its challenges ahead. Turkey’s achievements provide valuable lessons for many other developing countries, particularly now at a time of economic and political turmoil in Turkey’s own neighborhood.
Turkey’s partnership with the World Bank goes back 63 years -- to 1950. Over the years, our relationship has evolved. Today, we see sharing Turkey’s experience with other developing countries and collaborating with Turkey as an emerging donor and development partner as key areas of our engagement.
Last night, in fact, the World Bank and Turkey broke new ground by joining together with Turkish banks and the Borsa Istanbul to open the World Bank Islamic Finance Center in Istanbul. It is my hope that this Center will serve as a knowledge hub with Turkey taking a leading role in designing and delivering cutting-edge technical assistance, advisory services, as well as generating and disseminating practical knowledge on how to make Islamic finance more relevant for growth and development.
The recent growth and globalization of Islamic finance has been remarkable, with Sharia-compliant financial assets now estimated at over US$1.5 trillion. Many countries such as Bahrain, Indonesia, and Malaysia already have sizeable Islamic finance industries while other countries like Luxembourg and the UK are also keen to develop them.
Despite Turkey’s success, its own development agenda is far from complete. Many challenges remain, from boosting the labor force participation of women to increasing the skill levels of a young and growing labor force. More domestic savings and foreign direct investment are needed to make the country’s growth less dependent on the inflow of short term capital from abroad. In addition, promoting business innovation could help spur economic growth; diversifying and deepening the financial sector will be needed to finance the country’s ambitious infrastructure plans; and improving the business environment would give businesses the stability they seek.
During my visit, together with senior managers from 17 international companies, I will be discussing these challenges with Prime Minister Erdoğan at the 8th Investment Advisory Council meeting today. Turkey has come a long way, but its leaders are well aware of the risk of falling into the “middle income trap.” It is thus fitting that the government has set itself ambitious targets for 2023, the centennial of the foundation of the Republic. Turkey should not rest on its laurels.
The same advice goes for the international development community. Indeed, just six months ago, the World Bank Group endorsed two goals - to end extreme poverty by 2030 and to boost shared prosperity for the bottom 40 percent of the population in countries where we work.
To achieve these goals, we will need the dedication and support of all the member countries of the World Bank, of the private sector, of civil society. And I believe that Turkey, because of the significant progress it has made in its own development, can play an important role. In fact, given the considerable interest in Turkey’s success, we have started work on a project jointly with the Government of Turkey to bring together the lessons of experience from Turkey and make these available to policy makers elsewhere. Already, our teams have brought delegations from more than a dozen countries to Turkey to learn from its experience.
Turkey has the history, capacity, and accumulated knowledge to play a large and responsible role as a development partner and donor country. We look forward to our evolving partnership with Turkey to help sustain its 90 years of achievements, overcome remaining challenges, and share its experiences with countries around the globe.
The author is president of the World Bank Group. These remarks are based on a speech given yesterday by Dr. Kim at the 5th Izmir Economic Congress.