The next sudden stop
Sebnem Kalemli-Ozcan 07 January 2014
Financial crises are generally preceded by credit booms and a build-up of external debts. Although it is unclear whether Turkey is experiencing a financial bubble, as of 2013, 58% of the corporate sector’s debt was denominated in foreign currencies. This column argues that this explains the Central Bank of Turkey’s interventions to prop up the value of the Turkish lira. Given the relatively low level of reserves and the unfolding corruption scandal, it is a critical question how long the Bank can continue to do so.
The ominous facts are well known – the strongest predictors of financial crises are domestic credit booms and external debts (Reinhart and Rogoff 2011). In emerging markets, credit booms are generally preceded by large capital inflows (Reinhart and Reinhart 2010). Many high-growth emerging markets have been receiving capital inflows for the last five years as the developed economies have been attending to their wounds from the Global Financial Crisis. Now the tide is reversing. Emerging markets are experiencing slowdowns in growth and widening current-account deficits.
Financial markets International finance
capital flows, emerging markets, global financial crisis, sudden stops, Turkey, tapering, liability dollarisation
Whither Turkish pre-accession?
Philipp Böhler, Can Selçuki, Jacques Pelkmans 01 April 2012
Turkey has been a candidate for EU membership for 15 years. Some have argued that its best chance of gaining entry is to join the European Economic Area first. This column argues that such a move would be bad for Turkey and bad for Europe.
This year marks the 15th year of Turkey’s application for EU membership.
EU membership, Turkey
Turkey’s resistance to trade liberalisation with the EU through temporary trade barriers
Baybars Karacaovali 04 September 2011
Turkey has been one of the more active users of antidumping policies since 1989. This column suggests trade policy commitments with the EU may explain the recent rise in such temporary trade barriers. It adds that China has borne the brunt of Turkey’s protection over the 2000s, being involved in 43% of all antidumping cases and 82% of investigations.
Turkey, as a major emerging economy, started to use antidumping policies in 1989 and has since been one of its more active users (Bown 2010). Beginning in 2005, Turkey also adopted global safeguard measures, and this policy quickly became a significant temporary trade barrier (TTB) complementary to antidumping. More recently, Turkey has implemented a number of China-specific safeguards and countervailing duties, and its total use of temporary trade barriers increased especially over the second half of the 2000s (Figure 1).
antidumping, Turkey, temporary trade barriers
Demographic pressure versus labour market space: A global view
Marga Peeters, Loek Groot 02 August 2011
Fiscal pressure from demographic changes is mounting across the globe. This column asks whether labour markets will create enough jobs. Cross-country comparisons suggest that, until at least 2050, the countries most under pressure will be Poland, Turkey, and Greece.
Economists tend to study the problem of ageing in the developed countries in terms of rising old-age dependency ratios, which express the increasing higher number of pensioners for every working-age person. We can also apply the same reasoning to the young, where rising young-age dependency ratios in developing countries by definition implies more youngsters for every person of working age. But this is not the full story.
Labour Markets, Poland, Greece, Ageing population, Turkey, Demographic changes
Emerging partners create policy space for Africa
Helmut Reisen, Jean-Philippe Stijns 12 July 2011
Many discussions of official development assistance express concerns about China's growing investment and involvement in Africa economies. This column, summarizing the 2011 African Economic Outlook report, emphasizes the benefits of emerging economies' increasing presence in Africa, including the opening of African policy space due to Western donors' decline in relative influence.
Western politicians have watched the increased presence of emerging countries in Africa with much suspicion. Insinuations run from emerging countries – above all China – bringing down governance standards in Africa to them re-indebting, de-industrialising, and cornering African countries into the production of commodities while only enriching the elites. On a recent Africa tour, US Secretary of State Hillary Clinton warned Africa to beware of “new colonialism” as China expands ties there and focus instead on partners able to help build productive capacity on the continent.
Development International trade
China, Africa, India, emerging markets, South Korea, Brazil, Turkey
Globalisation’s impact on inflation in the European Union
Raphael Auer, Andreas Fischer 05 December 2010
Over the past two decades, Western European trade has become increasingly integrated with emerging economies. This column uses a novel empirical technique to show that import competition from East Asian low-wage countries – in particular China – has dampened inflation in five Western European nations. Increased integration with Turkey and Central and Eastern Europe, meanwhile, has had little effect on inflation.
It is anyone’s guess where EU inflation is headed once the effects of the financial and sovereign debt crises settle. What is certain, however, is that the inflationary process after the crises will be shaped by the same long-term structural developments that helped create the low-inflation environment in the years leading up to 2007. By far the most salient of these long-term developments is the increasing integration of the world economy, commonly referred to as “globalisation”.
Europe's nations and regions International trade
inflation, China, EU, Central and Eastern Europe, Turkey
Turkey’s road to Europe
Thorvaldur Gylfason, Per Magnus Wijkman 24 April 2010
Should Turkey join the EU? This column argues for Turkish membership in order to wed the economic interests of the country with the rest of Europe and reduce the chance of future conflict. To start the process of EU membership, Turkey should be invited to enter the European Economic Area.
“The natural effect of trade is to bring about peace.”
Europe's nations and regions
EU membership, Turkey, Balkans