Should prioritizing structural reforms and institutional quality focus on human development and quality of life instead of growth?-6

In our last article, we sought an answer to the question, "What should the new role of the state be in the economy?" within the framework of new searches between liberalism and socialism. The state must have roles beyond being a regulator and supervisor. In accordance with the principle of the social state, it must be a manager and guide in the market, depending on the conjuncture.

The state must also have the mission of being a fundamental player when necessary, especially in strategic sectors. The state should also address market failures by fulfilling the requirements of being a social state in areas where the market fails. Instead of an absolute or ideological approach to the question of "Is it the state that fails or the markets?", a rational perspective should be adopted.

We emphasized that within the framework of a social state understanding committed to corporate governance principles, adopting the view that the public and private sectors are not opponents, rivals, or alternatives to each other, but rather complements, will bring success.

Recently, while economic growth performance and per capita income levels are important in the development process of countries, development indicators such as people having access to quality education opportunities, leading long and healthy lives, gender equality, freedom, etc., are also being emphasized with importance. How sustainable development, which constitutes one of the top agenda items for national and international organizations, will be financed and with what resources, and the economic, effective, and efficient use of these financing sources are of great importance.

Furthermore, while the state targets growth, it will also take the necessary measures to ensure a fairer distribution of the values created and implement appropriate economic and social policies. As is known, when growth cannot provide human development, quality of life, and increased prosperity in an inclusive manner, a sustainability problem arises. Growth in countries with high levels of development is more inclusive, and these countries are more predictable in economic and political terms.

In their book titled "Why Nations Fail: The Origins of Power, Prosperity, and Poverty," Daron Acemoğlu and James A. Robinson emphasized the importance of the institutional change process by stating that the political and economic institutions created by people are effective in the formation of differences in both past development levels of countries and the current differences in prosperity, poverty, health, food—in other words, quality of life and development levels—between developed and underdeveloped countries.

They pointed to the importance of politics and political decision-makers in development by emphasizing that although economic institutions decide on the allocation of incentives, resources, investments, and innovation, the fundamental element that determines how economic institutions will function and what kind of evolutionary process they will undergo is political institutions.

The fact that politics and political decision-makers ignore the country's actual structural problems and prefer populist and palliative solutions, either by not establishing meritocratic cadres and strong institutional structures or by not taking structural reforms seriously, further widens this development gap. In order for the system in Turkey to work more efficiently and for the country to become more resilient to shocks, the existing system needs to be restructured.

The most important economic structural reforms that Turkey, which is under the burden of high unemployment and inflation, cost of living, unsustainable current account deficit, and heavy debt, needs, in addition to political and social reforms, can be gathered under 4 headings: "Liberating growth from its dependence on imports and reducing the current account deficit," "Transforming the tax system from one based on indirect taxes to a structure that emphasizes direct taxes," "Reducing dependence on a single source and country for energy," and "Sectoral reforms, especially in agriculture."

To Be Continued…