Addendum to Hurriyet column, Houses of BRIC and MIST

OK, I guess this is not a first: I have written an addendum before my Hurriyet column was published before. In fact, as I am writing these lines, there is just a minute to the publication if the column, and by the time I finish this email, it should be on the Hurriyet Daily News & Economic Review front page so that I will be able to hyperlink it.

Anyway, I would like to add one more point to the reasons behind my distaste for acronyms like BRIC and MIST. Not only do such acronyms imply that these economies are alike (which they are not), they also implicitly state that they are decoupled from the developed world. As John Auters of the Financial Times has argued recently, the crisis was an aberration. Leaving that exceptional episode aside, the assets of these countries continue to mimic those of developed countries. So from an investment point of view, argues Auters (and I tend to agree with him), you are not getting much in terms of diversification by investing in these countries. It is better to pick based on individual countries or sectors. For example, if you think oil prices will skyrocket, Russia is a better bet than Turkey, right?

I would also like to share Simon's other questions and my answers:

There has been a lot of talk among foreign policy wonks about Turkey apparently drifting “east” and away from decades-old alliances with the west – with the Iraq War, EU accession difficulties cited as deterrents from the Turkish side. Does the recent opening of the first Islamic investment fund signify something similar in economic terms?

"I would rather see it as part of efforts to make Turkey a regional finance hub: But as I wrote some time ago with a friend, there are huge institutional deficiencies we explained against that happening."

But I would like to add to my original answer that this is one of the most common questions I get from foreign journalists. I guess this Islamic investment thing has got much more attention abroad than at home.

From a ‘development’ and ‘equality’ viewpoint, what has been the impact of economic growth on living standards, wages, regional and class differences inside Turkey?

"This is a huge point: AKP's success at the polls should be (but it is often not) tied to their success at increasing the living standards of the lower classes. For some weird reason, you don't see it that well in standard inequality and poverty indices, but two economist friends managed to capture that in a research note. I refer to their work in a column. If you are interested, the blog version of that column has a hyperlink to the paper. As I explain there, that's also why addressing Turkey's current account deficit is no easy task."

Many thanks to Simon for the intriguing questions and motivating me to write on the MIST. And before I forget, the other members of the MIST are Indonesia, South Korea and Mexico. In fact, if you choose to refer to South Korea simply as Korea, the acronym becomes MIKT, which I like a lot more, as it reminds me of a certain Turkish word:)...