Academic journal article The Polish Quarterly of International Affairs

The Rise of Turkey and Poland: Implications for Economic Cooperation

Academic journal article The Polish Quarterly of International Affairs

The Rise of Turkey and Poland: Implications for Economic Cooperation

Article excerpt

Introduction

In a recent issue of the authoritative Foreign Affairs,1 a series of articles was devoted to growing emerging markets-GEMs, as editor-in-chief Gideon Rose branded them.2 Among these "hotter developing countries" are Turkey and Poland. The economic rise of the two countries in the last decade is indisputable. By very basic figures, GDP per capita, their stories are quite telling. Turkey's GDP per capita as a percentage of the EU average increased from 35% in 2003 to 55% in 2013; Poland's has moved from 50% to 68% in the same span.3 Poland was the only EU nation to escape recession after 2008, with the country's GDP rising on average by 2.8% between 2009 and 2013. Although Turkey has been hit by economic contraction (in 2009 it was down 4.9%), it soon recovered with GDP growth of 9.2% in 2010 and an average of 3.9% in the five years following the crisis.4 So, simplifying the complex economic problématique a bit, it could be argued that both countries did quite well in the aftermath of the Lehman Brothers default and reflected their stable banking systems, diversified and flexible economies, fairly strong macroeconomic balances, and sound policy responses during the crisis.5

The relative economic success of Poland and Turkey can be attributed to similar factors, as both "relied on youthful populations, relatively low debt levels and expanding middle classes to position themselves as the 'New Tigers', poised to help drive future global growth."6 Pundit Ruchir Sharma is among others who see these two countries, with GDP per capita in the $10,000 to $15,000 range, as having a good chance of exceeding 4% to 5% growth per year,7 thus outperforming their peers. Poland and Turkey rank closely in other economic indices. For example, in the PWC economic scorecard, which identifies five key determinants for growth,8 the two countries received an aggregated 6.5 and 6.2 points, respectively. Both Poland and Turkey are among "rapid growth markets" in a report published by Ernst&Young.9 Thus, the two countries seem to be destined to play an ever more significant role in the global economy.

At the same time, both face similar major challenges and economic choices. Among the concerns are how to close the innovation gap with other countries, which could help both escape the looming middle income trap, and how to avoid becoming "stuck in transition," to cite the title of an EBRD report.10 Data provided by the OECD's "Science, Technology and Industry Scoreboard 2013: Innovation for Growth" report is revelatory and indicative of the challenge ahead. Within the OECD countries and emerging economies, Turkey and Poland bring up the rear in numerous innovation-related indices, for example, in R&D expenditure in information industries, business enterprise expenditure on R&D,11 the number of patents (triadic,12 including ICT-related patents) and trademarks "abroad," number of knowledge-basedcapital-related workers,13 R&D personnel (the majority are employed in higher education rather than by the private sector),14 or direct government funding of business R&D and tax incentives for R&D.15 Concurrent to the OECD findings, in its "Innovation Union Scoreboard 2014," the EU places Turkey in the group of least-innovative countries (modest innovators), with Poland just one grade higher (moderate innovator, although only by a narrow margin).16 This data is reflected in the negligible share of high-tech in manufacturing exports-in Turkey it is about 2%, while in Poland it is 7%, which is still much lower than in the most advanced countries.17 Thus, Pawel Swieboda and Pawel Zerka are right to note that Poland and Turkey face a similar challenge of moving from an efficiency-driven growth model to an innovation-driven model.18

This extended introduction, in which Poland and Turkey have been presented as growing emerging markets facing similar economic vulnerabilities, leads to the main question of the analysis, i. …

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