This monetization of politics reaches its height during the party election season, which comes on every three years. This is the time when money flows like water; politicians call this season, “durian runtuh” (durian harvest). From the branch elections, the field of play moves through the divisional elections on to the national party runoff, with higher and higher payoffs. It is not uncommon to see branch and divisional officials and delegates to the national party general assembly during the election season having new motorbikes and cars at the end of the political harvest. This is how the political process in UMNO gets corrupted.
Friday, 9 February 2018
Monetization of politics reaches its height.......Chapter 5: Academic as Politician, Episode 4: This Political Life
This monetization of politics reaches its height during the party election season, which comes on every three years. This is the time when money flows like water; politicians call this season, “durian runtuh” (durian harvest). From the branch elections, the field of play moves through the divisional elections on to the national party runoff, with higher and higher payoffs. It is not uncommon to see branch and divisional officials and delegates to the national party general assembly during the election season having new motorbikes and cars at the end of the political harvest. This is how the political process in UMNO gets corrupted.
Tuesday, 27 September 2016
Chapter 5: The Academic as Politician, Episode 2: Chicken in a Pineapple Patch is OUT NOW!
Chapter 5: The Academic as Politician, Episode 2: Chicken in a Pineapple Patch is OUT NOW!
Friday, 29 April 2016
Chapter 5: The Academic as Politician, Episode 1: Curtain Call is Now Out!
This was the year of the “Bahtera Wawasan” campaign. Emerging from the 1987 TeamA-TeamB split, and the subsequent outlawing of UMNO to be replaced by the New UMNO (UMNO Baru) party under the leadership of Dr. Mahathir and Ghaffar Baba, his deputy as president of UMNO (and by tradition the sitting Prime Minister) and deputy prime minister respectively, a team of Young Turks, all strong supporters of the Prime Minister and were senior members of his cabinet (including two MBs), formed a slate (called Bahtera Wawasan – the “vision ship” – a salute to the Vision 2020 goal of Mahathir for the country to achieve developed nation status by 2020) to contest the 1993 UMNO MKT elections; led by Anwar Ibrahim, then Youth Chief, the slate included Najib Tun Razak, Muhyiddin Yassin, Mohamed Mohd Taib (MB of Selangor) and Rahim Tamby Chik (MB of Malacca State). Anwar was contesting the Deputy President’s post, Najib, Muhyiddin and Mohamed Mohd Taib for the three vice presidents post, and Rahim Tamby Chik for Youth Chief. Arrayed against them for the three VP posts were Abdullah Ahmad Badawi, Sanusi Junid (both ministers) and Isa Samad (MB of Negri Sembilan).Monday, 23 November 2015
People or Profit, a Hazy Outlook for Newly Launched Asean Economic Community
BY SHERIDAN MAHAVERA
The Malaysian Insider
Published: 23 November 2015 7:00 AM
The Malaysian Insider
Published: 23 November 2015 7:00 AM
The Asean Economic Community (AEC) launched with much fanfare yesterday seeks to offer prosperity to its 625 million people, but a civil society leader cites the region's annual smoke problem as a symbol and test of whether it can live up to the promise.
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| Kuala Lumpur and much of Malaysia and Singapore were enveloped in thick smoke last month due to forest fires started by big plantation companies in Indonesia. The new Asean Economic Community must stop the recurrence of the problem if it is serious in its objective, activists say. – The Malaysian Insider file pic, November 23, 2015 |
Jerald Joseph, the head of local rights group Dignity International, part of the Asean People's Forum (APF) 2015 attended by the region's biggest civil society organisations last April, cited the smoke problem as an example when talking about AEC. It is a symbol because it is the by-product of what AEC plans to achieve on a grander scale: allow Asean businesses the freedom and ease to set up shop in any of the ten member countries to take advantage of cheaper labour and untapped resources
Monday, 9 November 2015
Reuters: Banks' Dollar Borrowing adds Layer of Risk to Malaysia's Creeping Crisis
* Ringgit down around 20 percent against dollar this year
* Malaysia overseas borrowings $98 bln, currency reserves $94 bln
* Bankers say foreign borrowings mostly offset by dollar lending
* Current account surplus shrinking, forecast $2.6 bln in 2016
* Corruptions scandal seen creating policy uncertainty
KUALA LUMPUR, Nov 9 (Reuters) - To get an idea of how fragile Malaysia's external account is, consider this: the amount of foreign money invested in ringgit bonds and the dollar borrowings of its banks will together more than wipe out the country's currency reserves.
Eighteen years after being battered by the Asian financial crisis, Malaysia is once again facing a perilous combination of heavy short-term overseas borrowings by banks and scarce foreign exchange reserves.
Add in a festering political scandal and looming interest rate rises in the United States and the country is showing many of the symptoms that could presage another currency crisis.
Saturday, 7 November 2015
Apocalypse Now: has the Next Giant Financial Crash Already Begun?
The 1st of October came and went without financial armageddon. Veteran forecaster Martin Armstrong, who accurately predicted the 1987 crash, used the same model to suggest that 1 October would be a major turning point for global markets. Some investors even put bets on it. But the passing of the predicted global crash is only good news to a point. Many indicators in global finance are pointing downwards – and some even think the crash has begun.
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| ‘The biggest risk is not deflation of a bubble. It is the risk of that becoming intertwined with geopolitics.’ Photograph: Getty Images/Time & Life Pictures Creative |
Let’s assemble the evidence. First, the unsustainable debt. Since 2007, the pile of debt in the world has grown by $57tn (£37tn). That’s a compound annual growth rate of 5.3%, significantly beating GDP. Debts have doubled in the so-called emerging markets, while rising by just over a third in the developed world.
John Maynard Keynes once wrote that money is a “link to the future” – meaning that what we do with money is a signal of what we think is going to happen in the future. What we’ve done with credit since the global crisis of 2008 is expand it faster than the economy – which can only be done rationally if we think the future is going to be much richer than the present.
Our Worst Fears Confirmed – Mohd Nizam Mahshar
Kamal Salih Comments:
Nizam has consistently taken the position as point-man for those opposed to the TPPA recently negotiated by the 12 governments of the Pacific Region. He is chairman of the lobby group Bantah TPPA (Against TPPA). He is also the Executive Director of MTEM (translation: Malay Economic Action Council) a research body set up under the National Malay Chamber of Commerce and Industry. The following article is a propo the position taken by the Council.
The disclosure of the finalised texts of the Trans-Pacific Partnership (TPP) agreement has confirmed our worst fears about the purported 21st-century agreement.
Despite what governments and cheerleaders claim, our concerns have not been overblown, and it only goes to show what happens when we allow a select few – their every move monitored and driven by multinational commercial interests – to craft a deal behind closed doors.
Given that we will be legally bound to follow the TPP – or face trade or other sanctions should we be found in violation – the prospects are dire.
Saturday, 17 October 2015
Malaysia’s Spectacular Drop in Inequality, is it for Real?
Kamal Salih's Comments - My colleague Dr. Lee Hwok Aun (HA) from the Department of Development Studies at FEA, University of Malaya, wrote this piece which expresses some doubt about recent official figures relating to inequality in Malaysia.
HA together with Dr. Muhammed Abdul Khaleed and I co-authored the first UNDP Malaysian Human Development Report 2013, which was released last year, analysed many of the underlying factors in Malaysian Inequality situation.
The EPU also calculated the Gini Coefficient based on the latest Household Expenditure Survey (HES) instead of the Household Income Survey (HIS) and found that the HES Gini is even lower at 0.33 compared to the 0.401 according to the HIS data. We had counted that the improved figure is due largely to the debt component in the household fiscal capability (purchasing power) figure. This is consistent with high household debt levels in Malaysia. This too should not distract us from Hwok Aun's incredulity at the official inequality assessment.
Lee Hwok Aun
HA together with Dr. Muhammed Abdul Khaleed and I co-authored the first UNDP Malaysian Human Development Report 2013, which was released last year, analysed many of the underlying factors in Malaysian Inequality situation.
The EPU also calculated the Gini Coefficient based on the latest Household Expenditure Survey (HES) instead of the Household Income Survey (HIS) and found that the HES Gini is even lower at 0.33 compared to the 0.401 according to the HIS data. We had counted that the improved figure is due largely to the debt component in the household fiscal capability (purchasing power) figure. This is consistent with high household debt levels in Malaysia. This too should not distract us from Hwok Aun's incredulity at the official inequality assessment.
Lee Hwok Aun
Income inequality has fallen sharply in Malaysia. The divide between rich and poor phenomenally narrowed the past few years. If only you knew.
Judging by public discourses and perceptions, most people do not know. And most of the time we talk about inequality, we hear the opposite: inequality has been rising and rich-poor gaps are widening.
Writings on our socioeconomic condition, such as the commendable "Rich Malaysia, Poor Malaysians" by Anas Alam Faizli, largely argue that the benefits of economic growth trickle down to the masses much less than the affluence sucked upwards to the rich.
The government knows about this massive decline in inequality; our official statistics plot out the trend. The Gini coefficient, a figure between 0 and 1, is a widely used, simple and effective measure of inequality. The higher the Gini, the more unequal the distribution.
Visualising it helps. Malaysia's Gini coefficient series shows a clear downward trend in household income inequality from 2004 to 2012, after which it falls off a cliff. In 2014, inequality plunged to the lowest level ever.
These calculations are based on the Household Income Survey, a large and nationally representative dataset, and the best resource for computing income statistics. But are we handling the dataset properly?
The latest inequality figures painfully stretches the limits of plausibility. The data have been reported, without any attempt to explain possible causes for such a spectacular outcome. Even if we can rationalise this downtrend in inequality, could it have dropped so steeply?
Sunday, 11 October 2015
Saturday, 10 October 2015
Risk of Global Financial Crash has Increased, Warns IMF
The risk of a global financial crash has increased because a slowdown in China and decline in world trade are undermining the stability of highly indebted emerging economies, according to the International Monetary Fund (IMF).
The Washington-based lender of last resort said the scale of borrowing by emerging market countries, whose debts are vulnerable to rising interest rates in the US, mean policymakers need to act quickly to shore up the financial system.
José Viñals, the IMF’s financial counsellor, said the threat of instability and recession hanging over economies including China, Brazil, Turkey and Malaysia was one of a “triad of risks” that could knock 3% off global GDP. The second, he said, was the legacy of debt and disharmony in Europe, while the third is centred on battered global markets that are more likely to transmit shocks rather than cushion the blow.
At the very least, central banks would need to remain vigilant and be prepared to increase their stimulus programmes should difficulties in emerging market countries spill over into the financial system.
Addressing the prospect of an interest rate rise in the US, Viñals said there was little reason to tighten monetary policy before Christmas while inflationary pressures and wage rises remain low. “The risks of a premature tightening are greater than those of waiting two or three more months,” he said.
The warning follows a summer of turmoil in global markets triggered by China’s attempt to increase its flagging exports with a currency devaluation. The move sparked panic in stock markets, which tumbled around the world, as investors recognised for the first time the impact of China’s slowing economy.
Earlier this week, the IMF downgraded its forecast for global growth in 2015 to 3.1%, which would mark the weakest performance since the trough of the downturn in 2009.
Viñals said the IMF’s latest Global Financial Stability report showed western economies had regained some momentum in the past year and reduced their exposure to global shocks.
But those gains were underpinned by low inflation caused by a slump in oil and other commodity prices, with knock-on effects for oil and mineral-rich countries that rely on the income from commodity sales.
The IMF is especially concerned that corporations and banks in some emerging economies continue to rely on massive debt financing to maintain growth, making them vulnerable to further falls in commodity prices and declines in trade.
Malaysia at Risk in Event of Global Financial Crash, Says Report
Malaysia is one of several emerging economies at risk in the event of a global financial crash because of its high debts and unstable economic situation, the International Monetary Fund (IMF) said.
In a report by The Guardian, the fund highlighted corporations and financial institutions which relied on massive debt financing to maintain growth, adding that Malaysia was one example of countries allowing their their largest corporations to borrow heavily.
Other emerging economies included Brazil, Turkey, India and Argentina.
IMF financial counsellor Jose Vinals was reported as saying that the threat of instability and recession shadowing such countries could knock 3% off global gross domestic product (GDP).
“A collective effort to deliver a policy upgrade is needed urgently to face up to rising challenges in an uncertain world, to ensure financial stability and better growth prospects. Three per cent of global output is at stake,” he was quoted as saying.
This year, the ringgit has fallen nearly 20% against the dollar and the nation’s foreign reserves dropped by about the same percentage, to below US$100 billion (RM413 billion).
“It’s almost like a perfect storm for Malaysia,” Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said in a report by Reuters.
A widening political scandal and tumbling currency have steadily taken their toll on investor sentiment towards Malaysia, unnerving its neighbours despite the central bank’s efforts to contain the damage.
Bursa Malaysia has also been wiped out since July, primarily by the escalating political fallout from allegations of graft and mismanagement swirling around indebted state fund 1Malaysia Development Bhd (1MDB).
The scandal has amplified concerns that the country is emerging as the weakest link in a region struggling with falling commodity prices, feeble global demand and impending interest rate rises in the United States. – October 10, 2015.
Sunday, 27 September 2015
Can Malaysia Deliver Inclusive Growth?
In Asia, as elsewhere in the world, there is a growing consensus that economic growth should not be a country’s ultimate policy objective. Broad-based improvement in living standards matter as well. And while it is hard to raise living standards without economic growth, it is certainly possible for a country to achieve impressive strides in GDP per capita without most of the population feeling the benefit.
But what does a country need to do to ensure that economic growth benefits all citizens? That is a relatively new question on the research agenda, one which has moved into the mainstream only as the aftermath of the financial crisis lays bare the shortcomings of previous assumptions in economics.
According to a new contribution to this research by the World Economic Forum, one country that is doing most things right given its level of development is Malaysia.
The Forum’s new Inclusive Economic Growth and Development Report 2015 identifies 140 indicators that are thought to contribute to an economy’s capacity to grow inclusively. These 140 indicators are grouped into 7 pillars and 15 sub-pillars. Not a single country scores above average in all sub-pillars relative to its peers, but Malaysia is one of a handful that come close.
Because there is no research consensus on the relative importance of factors that could contribute to inclusive growth, the report does not attempt to rank countries overall. Instead, it ranks them on each indicator against a group of peer countries at similar income levels. The aim is to enable meaningful comparisons of relative strengths and weaknesses.
A comparatively low level of corruption is among the country’s strengths, with Malaysia ranking top among the 26 countries in the upper-middle income range for indicators such as ethical behaviour of firms and public trust in politicians. It also scores top on a measure of avoiding market dominance by incumbents.
Friday, 18 September 2015
Chapter 4: The MIER Years, Episode 5 Winding Up to Wind Down is NOW OUT!!
It was during the final prepatory meeting on the MAPEN Report that I received one day a call from Zainol Mahmud, director-general of the Implementation Coordination Unit (ICU) in the Prime Minister’s Department informing me that Dr. Mahathir wanted to see me. I assumed that it was about the MAPEN Report, or the fact that I had submitted to him previously a proposal to set up a Science City in the Ulu Langat area. It turned out to be neither. It was about another letter I sent him regarding an investment opportunity in Langkawi that was brought to my attention by Mark Heng and a scion of the Kuok family, Kuok Hoon Ping. This was about the government’s proposed divestment of the Langkawi Resort Hotel, the first 5-star hotel before the island got its duty-free status. Mahathir immediately put me at ease upon my entering his office, and as he is wont to do, immediately came to the point saying that he could not accede to my proposal to buy over the Langkawi resort, since he had already promised that to a Negri Sembilan royalty and their Japanese partners. There was still 19% he said I could participate in, to which I said I would only be in the minority and could not control it. He suggested to take it anyway, and perhaps later unload it for a higher price. He wanted me to learn the ropes, I guessed, but I declined and said I’d wait for another opportunity.
Sunday, 6 September 2015
Kamal on Bloomberg: Moving Malaysia, Malaysia to Face Fiscal Problems If Oil Below $40: Economist
September 4, 2015 (Kuala Lumpur) — Kamal Salih, economics professor at Universiti Malaya, says that Malaysia will face fiscal problems if oil prices dip below 40 dollars a barrel. He also discusses key themes shaping the local economy with Bloomberg TV Malaysia’s Sophie Kamaruddin.
Friday, 4 September 2015
Experts Point the Way Forward for Singapore Economic Growth
Kamal Salih Comment:
E.F. Pang and Linda Lim's comments on Singapore economic growth may well be relevant for Malaysia's own economic prospects for the medium term. Our immediate concerns, however, are markedly distinct respectively, namely the fiscal capacity of the government to promote aggregate demand in order to sustain growth above 5% in the face of declining oil and other commodity prices and the declining Ringgit. Singapore's immediate concern is over slowing growth (below 4%) and stagnant productivity under conditions of budget surplus. I wonder if there is anything useful from this following article for the Special Economic Committee to consider in delivering better news for the Malaysian economy.
Here is Pang and Lim's article:
Economists, government leaders and opposition politicians all agree Singapore must jettison its development model of “extensive growth” based on factor accumulation - the addition of more labour, talent and capital to the singularly scarce resource, land, that defines our territorial space.
We must, like other developed countries whose ranks we supposedly lead on many metrics, rely on productivity increases to deliver output growth at a much lower but more sustainable rate of 1-3% per year.
From our own experience and that of other rich countries, we know this is a difficult and long-term task requiring considerable behavioral adjustments at the individual and household as well as business and government policy levels.
Our recent survey of numerous labor market studies* shows low labor productivity has characterized Singapore’s economic growth as long ago as the early 1970s and as recently as the last several years. The heavy reliance on imports of foreign labor has depressed wages for low-wage citizen workers, contributing to our higher income inequality (income-only Gini of 0.46, not including wealth inequality which is typically higher) and poverty rates (20 to 22%) compared with other rich countries.
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| Singapore GDP ChartFrom Focus Economics |
Cutting back on labor imports can deliver productivity increases in sectors such as construction, retail and F&B where our productivity greatly lags that in other rich countries. But the cutback will be painful for businesses and households whose profits and consumption have been subsidized for too long by cheap labor imports. Our capacity for imitation, flexibility and innovation should help us adjust at least as well as other developed countries.
Tuesday, 25 August 2015
It Starts: Broad Retaliation Against China in Currency War
The biggest global “tail risk” is China’s deteriorating economy and an emerging market debt crisis, according to BofA Merrill Lynch’s monthly poll of fund managers. And 48% of them were expecting the Fed to raise rates, despite languid growth and low inflation expectations.
Hot money is already fleeing emerging markets. Higher rates in the US will drain more capital out of countries that need it the most. It will pressure emerging market currencies and further increase the likelihood of a debt crisis in countries whose governments, banks, and corporations borrow in a currency other than their own.
This scenario would be bad enough for the emerging economies. But now China has devalued the yuan to stimulate its exports and thus its economy at the expense of others. And one thing has become clear on Wednesday: these struggling economies that compete with China are going to protect their exports against Chinese encroachment.
Hence a currency war.
It didn’t help that oil plunged nearly 5% to a new 6-year low, with WTI at $40.55 a barrel, after the EIA’s report of an “unexpected” crude oil inventory buildup in the US, now, during driving season when inventories are supposed to decline!
And copper dropped to $5,000 per ton for the first time since the Financial Crisis, down 20% so far this year. Copper is the ultimate industrial metal. China, which accounts for 45% of global copper consumption, is the bull’s eye of all the fretting about demand. 5,000 is the line in the sand. A big scary number. Other metals fared similarly.
Copper powerhouse Glencore, whose shares plunged nearly 10% on Wednesday, blamed “aggressive and synchronized large-scale short selling” for the copper debacle, instead of fundamentals. But fundamentals have been whacking copper for years, and shorts have simply been joyriding the trend.
CIA insider: This is the Key to Understanding the Yuan-Dollar Relationship
No one disputes the fact that Janet Yellen and her colleagues at the Federal Reserve are one of the most powerful influences on the world’s largest economy. Yet few analysts realize that she is the most powerful influence on the world’s two largest economies — to include China’s.
Understanding how U.S. and Chinese monetary policies are now joined at the hip, and what this means for the entire world, is the key to understanding the global slowdown affecting stocks, currencies, commodities and even the real value of cash.
This chain of relationships has numerous links. Let’s explore them one by one…
Yellen makes no secret of her desire to raise U.S. interest rates. She talks about this every chance she gets in speeches, press conferences and interviews. Rates have been zero for almost seven years, and it has been nine years since the last time the Fed raised rates.
This has led to endless speculation about the timing of the Fed rate increase. In late 2014, Wall Street said March. Then June. Now September. So far, Wall Street got it wrong every time.
We don’t engage in strung-out speculation on the Fed’s next move. We use specific indications and warnings and proven analytic methods used by the intelligence community including the CIA to solve problems of this type.
What the Heck is Going on in the Global Markets?
Kamal Salih Comments:
A perfect storm is brewing in the immediate horizon of the Malaysian economy. I wanted to take comfort in pronouncements by the government leaders that, given our strong economic fundamentals, we (meaning government, business, exporters, importers and outbound travellers, ordinary consumers and folks) should face the blowing wind and ride out the oncoming storm. It is not as bad as the 1997 financial crisis, they say, and we had learned enough and adjusted from that experience. But the signs do not point to such self-indulgent confidence: The Ringgit is today 4.60 to the US dollar and has now 5 in view (and the government has abstained from pegging), even though there's no Soros in sight; oil prices are testing US$40 and Budget predictions for the year are flying out the window; other commodities are following suit; and the sloshing foreign funds that had fuelled the stock market and property has long taken their money out. And the GST has added more than its fair bite of living costs. With the 1MDB scandal, vacillations over the RM2.6b issue, the cabinet just reshuffled and a gaping trust deficit in the government's ability to handle the issues, we are told to continue sipping our coffee and teh tarik. Meanwhile, the over-dramatizers have been working overtime and predicting a momentous September. You can talk up a storm, but you can't talk it down. Our coffee cups are shaking...something's got to give!
To understand these massive shifts in the wind, I sought and share below with you three articles by Wolf Richter, of Currency Wars fame, to understand what's going on, and see where we can run for cover.
It Starts: Broad Retaliation Against China in Currency War
CIA insider: This is the Key to Understanding the Yuan-Dollar Relationship
What the Heck is Going On in the Global Markets! (Excerpted)
“A Global Meltdown…”
That’s what Doug Short called it in his World Markets Weekend Update. All its eight indexes finished in the red for the week. India’s SENSEX, he points out, “was the top performer, down a ‘mere’ -2.5%.” For the rest, they ranged from the Nikkei’s -5.28% to the Shanghai Composite’s -11.54%. The China bubble and implosion (blue line) is the most salient feature this year. By comparison, the selloff this week looks practically benign:
And oil got hammered for the eighth week in a row.
It was the longest weekly losing streak since March 1986. And on Friday, West Texas Intermediate plunged below the $40-mark intraday, hitting $39.86 before bouncing off to take a breath at $40.29, the worst level since the Financial crisis.
Since mid-June, when the delusions of an oil rebound came to an abrupt end, WTI has plummeted 33.6%.
US drillers have accelerated their drilling programs again. Global production, powered by Saudi Arabia, Russia, the US, and especially Iraq – and soon Iran – gives off no substantive signs of slowing down. Hopes for global demand growth are hitting the realty of economic turmoil in China and elsewhere. Crude oil in storage has reached disconcerting levels for this time of the year. And people are starting to pray for miracles.
The overall commodity complex hit new multi-year lows this week. But gold has been an exception, rising from its own dismal multi-year low at the end of July.
Shocked and appalled that the market had somehow rediscovered this dastardly will of its own, Wall Street is already clamoring for ZIRP Infinity and QE4 Infinity, a real “infinity” this time, because everyone knows that at these ludicrous valuations, the market can never stand on its own two feet again, and folks simply don’t want to give up the trillions that the Fed has so magnanimously shoveled their way.
To top it off, currency turmoil tore into the emerging markets, and a debt crisis is starting to build up on the horizon.
Wednesday, 5 August 2015
To Understand Malaysia's Economic Future, Look to Turkey NOT Greece
Comment: Perhaps we should look away from the experience of Greece, with emphasis on the debt-to-GDP ratio, to see where Malaysia's macroeconomic future is heading, and instead to consider the Turkish situation over the 2002-2014 period. Turkey's GDP per capita growth over the period is no better than Malaysia's over the period but comparable to all intents and purposes; what should concern us is the shift that both governments had adopted towards a consumption-based (and in our case, ominously) debt-driven economy. Focus on the fact that Turkey had been effectively dissaving, while we are sustained over the same period only by a higher savings rate. As GST bites into consumption expenditure, a similar process may set in over the medium term in our own situation unless serious reforms are undertaken to reverse current trends and reset the economy. I republish below for your information Danny Rodrik's recent piece on his weblog.
Kamal Salih
Preparing for a panel discussion on Turkey gave me the opportunity of putting together some notes and slides on the country’s economy.
That Turkey is not doing well at the moment, economically or politically, is well known. But the roots of the problem remain misunderstood. Many analysts blame the weakening of “structural reforms” (on economics) and the turn towards authoritarianism after the Gezi protests in 2013 (on the politics). See for example here. In truth, Turkey’s problems on both fronts predate the recent slowdown in growth and have been long ingrained in the governing party’s (AKP) strategy. I have discussed the politics before at length. Here I focus on the economics.
First, let’s dispense with some misconceptions about how well the Turkish economy did under Erdogan. As the chart below shows, Turkey’s growth performance since 2002 (when AKP took over) has been middling. A 50% increase in per-capita GDP (at constant prices) is nothing to scoff at, but it is below what Sri Lanka, Bangladesh, Uruguay, Peru, Argentina, Ghana, Indonesia, Philippines and many others – not to mention China and India – have achieved. (And no, Turkey’s income did not triple over this period, as government officials claim.)
Source: IMF
Tuesday, 21 July 2015
Chapter 4: The MIER Years, Episode 4: Son of the NEP is NOW OUT!!
Dr. Mahathir didn’t seem to be worried about the situation. It was about a year away from the end of the First Outline Perspective Plan (OPP), the twenty year timeframe from 1971 through to 1990, marking the formal end of the New Economic Policy, that was mandated by the National Consultative Council in 1970 to be implemented over the twenty years. The national consensus was to restructure Malaysian society and eradicate poverty on the back of the May 13th Incident. At this time the government was focussed on consolidating the nation’s recovery from economic recession of 1985.
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