On a recent trip to Istanbul, I participated with Turkish Undersecretary of the Treasury Dagdas in the launch of the World Bank’s new “Turkey’s Transitions” report. The report examines Turkey’s experience in the transition from a lower middle-income to an upper middle-income economy, and looks at what has worked well and what needs to change. It holds valuable lessons for other emerging market economies on the way to high income status, and is part of an effort in the World Bank Group to better record and facilitate access to development knowledge residing in the experience of our clients as well as our own staff. For more on the report, please see the infographic, video interview and feature story. Below are my remarks at the event.
Opening Remarks for Launch of the “Turkey’s Transitions” Report
Dear Undersecretary Dagdas, Excellencies and Honorable Guests from around the region, Ladies, and Gentlemen,
It is my great pleasure to be with you on this occasion – the launch of a new report on “Turkey’s Transitions” and the lessons it holds for other emerging market economies on the way to high income status. For 2000 years, travelers have come to Istanbul to learn, to trade, and to exchange ideas. Today, Istanbul is once again one of the main crossroads in the international flow of goods, services, and knowledge. It is thus a fitting venue for the launch of this report.
I want to start by expressing my thanks to the Turkish authorities for hosting us here today, and, in particular, to our colleagues in the Under-secretariat of the Treasury, who have been excellent partners in the preparation of this book. I also want to thank warmly our international guests who have made the effort to come here and reflect jointly on the relevance of Turkey’s experience for their own countries. I look forward to the panel discussion later this afternoon.
The rise of the emerging markets is changing the global development landscape. For many developing countries the most pertinent development experiences, come not so much from the industrialized countries of Western Europe and North America, but from the dynamic emerging market economies. Development knowledge today is shared in real time between practitioners and policy makers facing similar challenges.
Our report on lessons from Turkey’s development experiences is part of an effort in the World Bank Group to better record and facilitate access to development knowledge residing in the experience of our clients as well as our own staff. The presence of so many high-level guests from other countries I believe demonstrates that this effort is worthwhile.
Our Country Director for Turkey, Martin Raiser, has already shared the main findings of the report with you. Let me just pick out three key messages that particularly resonated with me.
First, Turkey’s economic rise is ultimately a story of successful international integration. The experience of Europe and Central Asia Region demonstrates the power of economic integration, through trade and financial linkages, to bring about convergence in living standards. The European Union’s enlargement project has been fundamental to the unique record of regional convergence within Europe – a phenomenon we have called the “convergence machine”. Turkey has been part of this machine and has benefited from its trade and financial linkages with Europe. The challenge for Turkey today is how to build on the foundations of its economic integration with the European market to increase the country’s global presence and competitiveness. As I know from discussions with policy makers from around the region, this is a challenge Turkey shares with many other European countries. Improving competitiveness is thus one of the core objectives of the World Bank Group in its work in the Europe and Central Asia Region.
Second, Turkey’s growth has gone hand in hand with poverty reduction and better access to services for the less well off. In other words, Turkey’s prosperity has been shared. The Report contains a rich analysis of Turkey’s experience in achieving universal access to health care and widening access to education. It also contains important lessons in how to ensure that economic growth goes hand in hand with job creation – which in turn is a key channel for spreading the benefits of growth across the population.
The growth of cities has played an important role in improving income opportunities and access to services for the poor in Turkey. Turkey’s successful urbanization experience may be particularly valuable for many countries in Africa as well as MENA. But while Turkey’s progress is impressive, serious inequalities remain. For us in the World Bank, one of the most important aspects of our partnership with Turkey is to help ensure that the progress in shared prosperity is sustained and extended and that remaining pockets of vulnerability are closed.
Third, the Report points to the challenges that upper middle income countries like Turkey face to complete the transition to high income status. I am not sure I find the term “Middle Income Trap” helpful – there is no reason for countries that adopt the right policies to remain trapped. But the right policies include difficult institutional reforms, such as strengthening the rule of law and arm’s length market regulation, decentralizing decision making, and introducing performance based management in the public sector.
The call for structural reforms is not new. But our analysis suggests there is some urgency for Turkey – as for many other emerging as well as advanced economies – to move on with implementation of structural reforms. The Government’s 10th National Development Plan and the recently announced Transformation Programs contain many good ideas for these reforms.
Our partnership with Turkey reaches back several decades. In the course of this partnership we have learned a lot. With this Report and today’s discussion we want to share this knowledge with you.
We are grateful to the Government of Turkey for giving us this opportunity and to all of you for your comments and feedback on this work. Finally, let me thank the World Bank team for putting this event together and preparing what I believe will remain an important reference work on Turkey’s development experience for years to come.
Thank you for your attention.