Monday, May 31, 2010

Weekly Hurriyet Column: Taking the Ankara horse to water

Below is the unedited version of my column for this week. You can read the final version at the Daily News website, but since I have been editing my columns myself on the Daily News website since March, you won't see much of a difference between the two. No cheesy movie references this time around; as for the title, it is from the interview.

As I mention in the piece, Jeff was kind of to devote more than two hours to our chat, so I have much more very interesting material, which I couldn't fit into my 3700-character limit.  I would like to turn those into an interview piece, sort of like the Lunch with the FT series I admire so much (since the Daily News is much poorer than the FT, it'd have to be sort of "coffee with the Daily News", but still), but I am still waiting to hear from my editor-in-chief for the green light on that.

Economics columnists focusing too much on macroeconomics and finance and not enough on the real economy and sectors are frequently criticized by David Judson, editor-in-chief for the Hürriyet Daily News & Economic Review.

He does have a point. Despite some occasional glitches every now and then, Turkey’s macroeconomic policy is mostly on track thanks to prudential macro management after the 2001 crisis. However, macro reforms have not been followed my micro ones except for a few feeble attempts during the first Justice and Development Part, or AKP, government.

Skimming through my columns for the past year, I was able to find only a few non-macro articles, so I asked Jeffrey Kemprecos, pharmaceutical giant Merck Sharp and Dohme’s (MSD) Executive Director for Public Policy & Corporate Responsibility in Eastern Europe, Middle East & Africa, for an interview.

When he was assigned to Turkey in 2005, Jeff was quite hopeful that Turkey could gain a foothold in the innovative medicines sector due to its advantages such as geography, demographics, enormous domestic market, decent higher education system and scientific/medical diaspora.

Five years later, as he is about to leave Turkey, he is still hopeful that the country will realize its potential. He believes that Turkey could follow in the steps of Singapore and Ireland to become a world-class competitor in the innovative medicines sector. Attracting only 1 percent of the $100 billion innovator companies invest each year would put the sector into the top three in terms of FDI; the country is getting only about $40-$50 million now.

The Association of Research-Based Pharmaceutical Companies in Turkey actually produced a vision/roadmap report for 2015, outlining how to reach this goal. With 80-90 policy recommendations scattered throughout, the report can be criticized for looking like a grocery list, and not an action plan based on the binding constraints hampering the sector.

But even as it is, the document and the know-how behind it, which investment-hopefuls like Russia and Israel are more than keen to deploy, is a goldmine for policymakers. So Jeff was bitten by reality when they did not get a single response after they distributed the report in 2008. They finally got invited to the Undersecretariat for Foreign Trade in October, but have not heard from them since.

MSD and the Association’s other efforts to get the policymakers’ attention, such as fact-finding missions to leading sectoral clusters, or even getting the government open up a stand in the sector’s leading convention, BIO, have also been in vain. In Jeff’s words, they have led the horse to water, but they have not been able to make it drink the water.

That’s why Jeff emphasizes regular dialogue with policymakers as his most important policy recommendation, citing Massachusetts as a best case. In fact, he feels that his sector is not unique in this respect. As Vice Chairman of the U.S. Chamber of Commerce, he is unaware of any sector that has established a sustained, constructive and forward-looking dialogue with the government on coherent policies and strategies.

Jeff is also keen to emphasize that he is not asking for money. That makes sense, given that his company’s R&D budget is about 10 times TÜBİTAK’s and nearly twice of Turkey’s total R&D spending of 4.4 billion Turkish Liras (as of 2006). It is also important to note that he mentioned November’s pricing adjustment only once during our two hours of conversation, and not a single policy recommendation in the roadmap involves government subsidies. So it’d be unfair to disregard his outcry as rent-seeking.

But having known the Prime Minister’s temper firsthand, I do hope I did not just cost Jeff his soon-to-be-acquired Turkish citizenship…

Emre Deliveli is a freelance consultant and columnist for Hurriyet Daily News & Economic Review and Forbes as well as a contributor to Roubini Global Economics. Read his economics blog at

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