Seven lessons Ukraine should learn from Turkey
Swedish economist and a Senior Fellow at the Atlantic Council Anders Aslund’s opinion on the good Turkey’s practice Ukraine should learn to succeed in the economy sector.
In Turkey, the ratio of investments to GDP is 30%, while in Ukraine it’s 21%
In 1989, Ukraine and Turkey had approximately the same GDP per capita by purchasing power parity. Today the indicator in Turkey is almost three times higher. Starting from 2010, the Turkish economy grew by 7% a year, while the Ukrainians grew by only 2.5% last year. Ukraine should learn from Turkey.
There are many new factories and warehouses on the outskirts of Istanbul. Many of them belong to foreigners, that fact proves the dynamics of Turkey’s economy. In Turkey, the ratio of investments to GDP stands at 30%, while in Ukraine it’s 21%. Turks complain that foreign investment is only 4% of GDP, but in Ukraine this number is even lower.
What is happening in Turkey today? The Presidential control over the judicial system is increasing, but property rights are much better protected than in Ukraine. This is the key difference. But Ukraine has an reason for optimism: its population is much better than in Turkey.
What lessons should Ukraine learn?
Stop using the country’s judiciary and security institutions, mainly, The General Prosecutor’s Office and Security Services of Ukraine, from harassing the legitimate and law-abiding businesses.
These institutions should not have departments for investigating economic crimes.
Ukrainian courts are corrupt and unfair.
Re-installation of a number of marred judges in The Supreme Court, who did not pass the integrity test undermines the judicial reform. It needs to be changed.
It is necessary to create an honest and strong anti-corruption court, that would work in tandem with the National Anti-Corruption Bureau.
The country’s agricultural sector has long been the engine of economic growth in Ukraine. In order to strengthen its development, it is necessary to allow to buy and sell agricultural land.
The Ukrainian state still has 3,500 corporations, which are corrupted and which hinder the development of a free market. State companies that are not of special value should be sold as soon as possible.
Like in Turkey, the Ukrainian financial system is dominated by banks, but as much as 56% of bank assets belong to the Ukrainian state, and more than 10% belong to Russia.
In order to attract new private capital into the system, the state-owned banks need to be privatized.
It is vitally important to attract foreign investments. The international financial institutions should become the leaders in this process. They could lay foundations for a new environment for raising capital, by providing annual funding of 4-5% of GDP.
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Tags: Aslund economy investment Turkey