Intentional devaluation seems about right. Crushing wages and savings of the peons, and probably the same 'Confessions of an Economic Hit Man' shenanigans that revolve around the cyclical emerging-market currency crisis.
Strategically, add to the mix Turkey's position for overland-transit of hydrocarbon. Connecting EU to *all* of its suppliers is a nice card to hold. Erdoğan can count on extracting at least some discount in energy, compared to EU.
This is useful, and yet doesn't account for the fact that the export industry in TR is reliant on imported raw materials - thus reliant on the exchange rate.
To those who say export-oriented, and domestic substitution policies do not work---please see Singapore, where national policy is to obtain current account surpluses, and engages in government-backed import substitution where possible. Highest per capita GDP around.
Indeed, the entire Asian Pacific has flourished with export policies.
Even David Ricardo eschewed his own free trade theories when capital is mobile between nations. Which it is.
If you want to see abject failure, check out Greece's GDP since the Global Financial Crisis. Down 25% and stayed there. But Greece beat inflation. Yahoo!
Well written as always. I remember working a lot on EM currencies in the summer of 2018 and all we could talk about was how the lira was going to enter full death spiral mode any day. But as you say, investors just keep coming back.
You seriously underestimated the negative effects of high inflation, we are talking about ~50% here, not %3-5. Plus for the grand strategy you implied requires way more complex simultaneous policies, in our case we don't have any of them except the weak currency.
If Turkey were more in line with American foreign policy, I suspect that the criticism of Erdogan and his monetary policy would be greatly toned down, to put things mildly.
I don't see why exports carry such weight in our economic thinking. Who cares? I'll take the wealth (US model) - you can have the exports (Turkey model).
The argument is not that it is a good idea. The argument is that it is a mercantilist strategy. You may not approve of it. But it is not without an internally coherent logic. And it's not just exports. With a weaker lira, Turkish products also get more competitive relative to foreign products in the domestic market.
I agree with that - but there's always some rationale. Perhaps it's "stay in power by handing out money" or perhaps it's "don't admit being wrong because that gets you un-elected." All logic is not created equal.
Intentional devaluation seems about right. Crushing wages and savings of the peons, and probably the same 'Confessions of an Economic Hit Man' shenanigans that revolve around the cyclical emerging-market currency crisis.
Strategically, add to the mix Turkey's position for overland-transit of hydrocarbon. Connecting EU to *all* of its suppliers is a nice card to hold. Erdoğan can count on extracting at least some discount in energy, compared to EU.
when I was still working on things SME, starting in 2018 or thereabouts we began finding so many new midsize exporters from Turkey
This is useful, and yet doesn't account for the fact that the export industry in TR is reliant on imported raw materials - thus reliant on the exchange rate.
Nicely done.
To those who say export-oriented, and domestic substitution policies do not work---please see Singapore, where national policy is to obtain current account surpluses, and engages in government-backed import substitution where possible. Highest per capita GDP around.
Indeed, the entire Asian Pacific has flourished with export policies.
Even David Ricardo eschewed his own free trade theories when capital is mobile between nations. Which it is.
If you want to see abject failure, check out Greece's GDP since the Global Financial Crisis. Down 25% and stayed there. But Greece beat inflation. Yahoo!
Well written as always. I remember working a lot on EM currencies in the summer of 2018 and all we could talk about was how the lira was going to enter full death spiral mode any day. But as you say, investors just keep coming back.
You seriously underestimated the negative effects of high inflation, we are talking about ~50% here, not %3-5. Plus for the grand strategy you implied requires way more complex simultaneous policies, in our case we don't have any of them except the weak currency.
If Turkey were more in line with American foreign policy, I suspect that the criticism of Erdogan and his monetary policy would be greatly toned down, to put things mildly.
I don't see why exports carry such weight in our economic thinking. Who cares? I'll take the wealth (US model) - you can have the exports (Turkey model).
The argument is not that it is a good idea. The argument is that it is a mercantilist strategy. You may not approve of it. But it is not without an internally coherent logic. And it's not just exports. With a weaker lira, Turkish products also get more competitive relative to foreign products in the domestic market.
I agree with that - but there's always some rationale. Perhaps it's "stay in power by handing out money" or perhaps it's "don't admit being wrong because that gets you un-elected." All logic is not created equal.