Is Turkey Economically Ready to Join EU?

Turkey’s candidature for the European Union is maybe the most controversial and consequently well-analyzed of any in the history of the organization. The topics of the debate are familiar: human rights abuses, overly uppermost military, and the impact of Islam on the one hand, contrary to strategic partner, valid candidate, and the advantages of including a Muslim democracy on the other. The interaction among these factors will define Turkey’s progress toward membership over the next several years.

Notwithstanding, in theory the EU defines membership eligibility rested on a set of impartial criteria that do not take diplomatic issues into account. As Turkey has already been accepted as a part of Europe, it should be practicable to evaluate its performance as compared with these criteria and to the status of other EU candidates, past and actual, at major points in the accession process.

The economic aspects of the entry of Turkey to the European Union are of great significance and need special attention. The given paper aims to provide a short overview of Turkey’s economy and to highlight the major problems concerning GDP, agriculture, manufacturing, inflation and currency issues.

Turkey is regarded to have a less middle-income economy. Its per capita is correspondingly small contrasted to the EU. The GDP per capita in conditions of Purchasing Power (PPS) was in 2003 at 28.5% of the EU-25 medium, corresponding to the level of Bulgaria and Romania. Valued in current prices in 2003, the GDP of Turkey was comparable to about 2% of the GDP of EU-25 or just half of the ten Member States.

Turkey is distinguished by large provincial disparities which widely follow a West-East pattern. The richest areas are concentrated in the western part of the country while the poorest ones are at the eastern frontier. The richest province Kocaeli, an essential manufacturing location, has a GDP per capita of more than 90% above the national average (46% of the EU-25 average). At the other edge of the gradation, the poorest regions Agri and Van have only around one third of the national GDP per capita (8% of the EU-25 average).

These profits disparities are displayed in the sectoral structure of the areas. The richer areas have significant shares of production and occupation in manufacturing and assistance whereas in most of the other territories agriculture is the most essential derivation of income and employment.

In the late decades some macroeconomic and commercial crises took place in the country, more recently in 1994, end-1999 and early-2001. They have caused to high volatility in aggregate financial activity and interfered with the overall step of growth. Since 2001, more advances have been made in stabilizing the economy and addressing the main reasons of these crises in the last decades. This is especially visible in the resumed enlargement path and the sharply lessened inflation. Nevertheless, this stabilization process is not yet full and some imbalances, such as the broadening external shortage remain to be amended. Further accomplishment of structural reforms would not only help to escaping stabilization crisis, but also let Turkey to attain or even lift its growth potential.

Even though Turkey’s population is appropriately large, its GDP represents just over 2% of the EU-25 GDP. As a result, the favourable economic impacts of Turkey’s membership in the EU are likely to be disproportional, for instance small for the EU-25 as a whole and much bigger for Turkey. The results on the EU will very much depend on the manner the Turkish economy will be able to manage its arrangement for membership.

The admittance of Turkey would display economic defiance, and implicitly chances to all parties included. Overall, EU Member States’ economies would advance from the admittance of Turkey, albeit only minorly. An advance of growth in Turkey should present a positive influence to EU-25 exports

Turkey would advance considerably from its admittance to the EU. Admittance should boost Turkey’s development basically via enlarged trade, higher contribution due to higher FDI, inflows, and higher productivity development due to a change in the sectoral arrangement of output and the accomplishment of structural renovations in line with the more competitive EU internal market setting.

Agriculture is the basic significance to Turkey, both in social and economic conditions. About half of Turkey’s territory of some 79 million hectares is occupied with agriculture, which is hardly ever in line with the EU 27 average (48%). Turkish admittance would be therefore add about 39 million hectares to the EU’s agricultural territory. This would show 23% of the EU-25 agricultural area. In 2003 roughly one third of the labour force was occupied in agriculture, and in the same year the sector showed 12.2% of GDP.

The climatic and geographical conditions across the country allow a broad sphere of various farming activities, and Turkey is a main world producer of (in no especial order) cereals, cotton, tobacco, fruit and vegetables, nuts, sugar beet and sheep and goat meat. Roughly 50% of Turkey’s agricultural territory is given to arable crops (of which about 20% is fallow land and 20% irrigated), 25% to constant grasslands and pastures and 2.5% to constant crops (Cakmak E.H., 1998). There are important regional contrasts in production patterns.

The farm structure in Turkey demonstrates similarities with several of the new member countries and with Bulgaria and Romania. In relation to the 2001 census there are about 3 million agricultural investments in Turkey (contrasted to almost 13 million in the EU-25), most of which are family farms engaging family labour. This is down from about 4 million investments in 1991. Numbers for the average size of investments propose that investments are small by EU levels (6 hectares on midpoint contrasted to an EU-25 midpoint of 13 hectares). These figures are numbers of investments and medium size is however not in line with the whole territory. The reasons for this discrepancy are not comprehensible, but they may stem from the exclusion of collective or unused land or defects in the statistical terms.

Maintenance and semi-maintenance farming is an essential characteristic of Turkish agriculture, as is the case in certain areas of the current EU and in Bulgaria and Romania. These farms are typically marked by productivity being low and only a small part of production being marketed. They are hard to reach with usual market and price course, but are decisive for the income defense and life of the most of the country population in Turkey. Turkish admittance would add over 80 million supplemental consumers to the EU-25 total of 452 million, nevertheless with a per capita buying potency substantially power than the EU-25 average.

A compared to earlier acceding state Turkey is bigger, more inhabited and poorer. It is also more argued in market terms than most. The competition of its agriculture and agri-food forms is, in general, less on average than in the EU.

A correct assessment as to what degree the existent CAP system could manage with an accession by Turkey and its connection for financial reserves would need a deeper examination, at least as thorough as the one that made in the case of the new Member Countries.


The Real Economy

How many times have you seen negative headlines? They are the mantra we hear from the media virtually everyday. "High gas prices are expected to spark inflation and could drive this economy to a halt." "Consumers are doubting economic future." "The sky is falling." That last one was actually from Chicken Little, or Al Gore on the environment, or something like that. Any way, the news isn't good, but the economy keeps on chugging along at excellent levels.

The media may have an incentive for the economy to decline. According to most scholars who monitor journalists, the vast majority of those in media (approximately 80%) describe themselves as "liberal" or "very liberal." That percentage may be higher than the entire delegation to the Democratic National Convention from Massachusetts. If they keep saying it is bad long enough, and we believe it, people might vote their liberal friends to office. Stranger things have happened.

Also, when is the last time people bought a newspaper because of good news? "The Economy is Great" or "Everything is Fine" rarely catches a person's attention. Imagine the little kid with suspenders and cap running through the streets in an old black & white film with a newspaper, yelling "Extra, Extra, prosperity breaks out everywhere!" It should happen, but it rarely actually does, although we seem to celebrate the economy every day in the real world.

Speaking of the real world, the place most journalists don't appear to live in, but where I make a living, I find a very different economy.

I find more optimism about the future than any time in the last twenty years.

I find more employers hiring more employees than I have seen in years.

I am finding a record number of businesses expanding rather than laying people off.

In other words, I find a pretty solid economy. I prefer my economy and it seems more realistic than the one promoted by the media and I hope Americans don't drink the poisoned Kool-Aid the media is handing out. Let the media remain scared in an effort to sell newspapers or even change government. Let's you and I stay in the real world.

The inability of the media to stay in the real world has led to its massive decline. The heavily hierarchical media structure that drove information for decades (from the media down to the consumer) was overtaken by the surprising popularity of talk radio in the 80's and 90s (a forum where real people could express their views) and is being obliterated by the Internet which is now overwhelmingly being driven by the audience rather than the "media elite."

The next time you hear so-called "bad news" about the economy, take a positive step. Consider investing in something new, maybe contemplate the hiring of an employee, or see what you can do to add to this impressive economy noted for record growth. Let the journalists continue to live in their private little world, with its personal agendas, no matter how depressing it may be. But by all means, don't join them. Be real, like the economy.