Daron Acemoğlu, a prominent professor of economics at the Massachusetts Institute of Technology (MIT), expressed concern about Turkey’s economic trajectory, highlighting the precarious state of the nation’s economy and the exodus of its brightest minds in an interview with the Cumhuriyet daily published on Wednesday.
Acemoğlu, known for his extensive research on political economy and for co-authoring “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” with colleague James A. Robinson, noted that the situation in Turkey is particularly peculiar with regard to the minimum wage.
He pointed out that the minimum wage in the country is relatively high considering income distribution and affects almost half the country’s workers. Nevertheless, it is not enough in real terms to lift many people out of poverty, especially in large cities such as İstanbul and Ankara.
According to Acemoğlu, this is due to a flawed industrial system characterized by low productivity and efficiency resulting from broken institutions, insufficient investment in technology and poor human resources.
Acemoğlu’s remarks come amid ongoing economic turmoil in Turkey, characterized by rising inflation and volatility of the Turkish lira.
Since national elections in May, the government of President Recep Tayyip Erdoğan has embarked on a new course in economic policy.
Turkey’s central bank surprised the market in November with a larger-than-expected interest hike as it ramped up its fight against inflation and efforts to support the slumping lira.
The bank increased its policy rate by 5.0 percentage points to 40 percent on the sixth month of a belt-tightening cycle that has more than quadrupled borrowing costs.
On Thursday the bank is expected to raise its policy rate by another 250 basis points to 42.50 percent, according to a survey by the state-run Anadolu news agency.
Regarding Turkey’s efforts to emerge from the current crisis, Acemoğlu said there has been no significant progress, stating that lowering inflation is a challenge and will not solve the country’s deeper problems on its own. These problems, Acemoğlu said, include systemic ones that have led to a narrowing of the window of opportunity for Turkey’s development.
Acemoğlu also addressed the role of technology in exacerbating class differences. He argued that technology, once seen as a beacon of hope and progress, has increasingly become a tool for a small elite to enrich themselves and deepen the social divide.
Turkey, where internet freedom has steadily declined over the past decade, ranks among the “not free” countries concerning online freedoms, according to a report released by the US-based Freedom House in October.
For Acemoğlu, the misuse of technology, particularly by authoritarian regimes, has turned it into a powerful tool of surveillance and control, further restricting freedoms and democratic practices.
Against the backdrop of the current situation in Turkey, Acemoğlu expressed concern about the growing exodus of the country’s brightest minds due to the increasing restriction of freedoms and the country’s bleak future prospects. He warned that such an exodus could lead to “a national collapse” if the numbers continue to rise.
Over the past several years Turkey has been suffering from a deteriorating economy, with high inflation and unemployment as well as a poor human rights record. President Erdoğan is criticized for mishandling the economy, emptying the state’s coffers and establishing one-man rule in the country where dissent is suppressed and opponents are jailed on politically motivated charges.