Turkey’s Referendum: How will President Erdogan react?

This weekend, Turks will vote on a referendum that could quite possibly shape the destiny of their country for the foreseeable future. If enacted, Turkey would abandon their parliamentary system in favor of a presidential system. This consolidation of the power of the government into the Executive office would effectively catapult current president Recep Erdogan (until 2029) and future presidents into a seat of power not unlike the caliphs of the old Ottoman Empire. Under the new system, parliament would have little to no control over what Erdogan does with his power.

The referendum is most likely to end up being voted into action by the Turkish populace, and with that “yes” vote, I believe that Erdogan’s impact on his country should be examined. From 2002-2012 (his term as prime minister), Erdogan’s policies grew Turkish real GDP (illustrated in the graph below) by 64% and per capita GDP by 43%, vastly outpacing the rest of its peers in the Middle East, despite the natural resource imbalance against Turkey. Throughout his tenure, inflation has fallen from 32% to 9%, which is still quite high, and unemployment has stayed roughly constant. He has pro-worker labor policies, has increased the budget for the Ministry of Education 5-fold from 2002-2011 and has overhauled the nation’s infrastructure holdings, leading to increases in human capital (H), labor (L), and capital (K), and subsequent shifts outwards in Turkey’s long-run aggregate supply curve.

Image result for Turkish GDP graph versus US

 

Though Erdogan has certainly been a boon economically for Turkey, he has shown himself to be a fairly authoritarian president even under the constitutional system. His administration has come under fire for censoring the press, with a Freedom House press freedom score of 71/100 (with 0 being best in the world and 100 being worst). After the attempted coup in 2016, there was intense crackdowns on any criticisms of the government, with 47, 155 arrested. This move towards authoritarianism could make the rule of law not trustworthy in the new Turkish Republic, leading to a decrease in total factor productivity and a shift back in the long run aggregate supply curve. Another decrease in TFP could come from reduced global trade with Turkey if it decides to move in this intensely nationalistic new direction, much the same as Russia.

Over the course of his time as Prime Minister and President, Recep Erdogan has immensely helped the Turkish economy and catapulted it to 18th in the world by GDP size, the highest in the Middle East, with only Saudi Arabia as the only Middle Eastern nation close to Turkey at 20th. However, his current shift towards authoritarianism could tarnish the work he has done rebuilding the Turkish economy through a variety of factors. Though past performance is no indication of future performance, signs point to Erdogan abusing his power if and/or when the referendum passes.  Much like Brexit in the UK, only time will tell how the referendum will ultimately affect the Turkish economy.

http://www.economist.com/news/leaders/21720590-recep-tayyip-erdogan-carrying-out-harshest-crackdown-decades-west-must-not-abandon

http://www.cnn.com/2017/04/12/europe/turkey-referendum-istanbul/

https://www.cia.gov/library/publications/resources/the-world-factbook/geos/tu.html

https://freedomhouse.org/report/freedom-press/2016/turkey

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2 thoughts on “Turkey’s Referendum: How will President Erdogan react?

  1. willdagostino

    Nice post Harp. I know his referendum recently passed. This could be good or bad for their economy. You made a good point that past performance is no indication of future performance, but you got to hand it to the guy, he’s been pretty successful in the past. I wonder if his success can continue until 2029, that would be quite the feat. No one will know until then.

    Reply
  2. Victor Matheson

    This isn’t the first time that authoritarians have had popular support due to economic success. The most famous quote about Italian fascism before WWII was that “Mussolini made the trains run on time.”

    Not a very good trade off in the long run for Italy.

    Reply

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