İstanbul, 12 Mayıs 2006
21. YÜZYILIN YENİ EKONOMİK GÜÇLERİ: BRIC VE TÜRKİYE
*Panelist
ALTUĞ KARAMENDERES
Ata Yatırım, Başekonomist
Mr. Chairman, ladies and gentlemen, I am very much pleased to take part in Istanbul Forum panel that may contribute to the co-habitation of economies and people. My presentation, although I am not from Goldman Sachs, I am from Ata Securities.
 We aim to reason the existence of a group by model developed by us Ata Securities and it’s called SCEP (Steel, Cement, Electricity, Population).
70’s were important years. Once there were developed economies and they inspired us about the possibility of the perspective of countries. BRIC -we will call it as T-BRICK, T for Turkey K for Korea- inspired us to redefine those countries with faster development perspectives. May authority in background bigger. How can we distinguish BRIC from others? Where do they get this BRIC reality from? It lies in capacity of investments or in capacity of GDP productions. Why cannot BRIC count provide potential before? To answer it will also help us to identify their common features. First of all they were closed economies in past, recently they increased openness to world economy both in merchandise trade and capital movements. Before they relied on import subsidization policies and developed their own industries through their own domestical means. They have vast domestic resources including population and they have self sufficiently grown. They have invested a lot in basic investment inputs but the GDP generation lacked behind the other countries and recently they have shown that they care about the concerns of global investors.
Yes our SCEP model tries to measure relative faster growth potential but at the same time it shows that it is the basic distinguishing feature of them to have high potential. To measure that potential we may start with the ranking of GDP for the top 20 countries, which we picked as our universe for the model. Of course as we mentioned earlier we will use it to compare with the investment inputs but let’s look at the slide briefly. As you may see those counties take some shares from the total of this 20 countries GDP sum and Turkey has 1% share in this top 20. South Korea, which should be added according to our model outcomes, has 2% and you see the rest of the countries, the countries are usually grouping around 1 or 2%, 3% and 6% with Japan and USA differs fro the others. We will use those country shares as denominator when we later justify our models based on that development economic perspective based on the investment inputs. Still is or first choice and you may see that Turkey gets 2.3% share out of top 20 steel production in the world and the model attempts to find the relative growth speed by taking 2.3% for Turkey as an example and dividing it with 1% in GDP share. That gives it 2.3 times faster grow potential. Just based on that input and if you would extend that specific example in the model for example to BRIC countries we sum the shares, it is 46% and divided it by 12.3% for the GDP shares we reached for a multiple around 4 times. So actually it may mean that BRIC countries can grow four times faster then the others.
Now we will have a close and brief look to other inputs like cement, Turkey again 2.3%, south Korea is 3.4% and multiples around three times, electricity has the lowest multiples but still very significant ones and population, well it has one of the important investment inputs to distinguished those BRIC countries from the others.
The SKEP model finally uses those shares, the shares of input in the total and comparing them with the shares in GDP. Each country share are taken and then consolidated by taking the average of them so we reach the share of each investment input that exilerates the growth potentials relative to the other countries.
So after doing that operation we reach to that final graph which classifies countries according to multiple sizes and the model reaches its aim on the grounds of 20 countries, as you see China tops by having the 6 multiple growth potential followed by India, Russia and Turkey. Turkey has 2 multiple and we see that South Korea follows and finally Mexico. Mexico has only one multiple, which means neutral in relative growth speed potential. But as you see that model just by relying on for investment inputs distinguishes BRIC countries but missing Turkey and South Korea and leaving Mexico just at the border.
So Goldman Sacs did the right job but probably missed the importance of the investment inputs that could play a role in possible potential future growth.
I like to say briefly few words on per capita GDP classification. Unfortunately it is a known fact that per capita GDP wise those countries which may from now on could be classified as TBRIC has different per capita GDP ranking but still belongs to the same group. I didn’t classify here the rest of the countries, which have average of 36.000 dollars per capita. I just would like to draw your attention to that relative to previous lists, Brazil and Russia changes place, India and China changes place and Mexico and South Korea changes place by the way Mexico infiltrated here but Turkey stays in the firm place and just looking at per capita GDP size of TBRIC it is only 2.000 dollars relative to developed markets, it is 18 times less or it is 18 times more with respect to developed markets. It is not a good measure to measure the potential growth. The multiples rather have told us that relative growth speed for example if the developed market is going to grow 4% a year China or India can grow 4-5 times faster, turkey can grow 2 times faster. For example with respect to that Turkey can grow annually 8% a year potentially.
But, last words about the ranking potentials and evaluation of them, although the multiples of China and India are very high when we sum those BRIC countries and look at how much share they get from the cake of multiples we see that China and India take half of the cake and other countries take almost equal shares and looking from a perspective of an investment company that will also allow us to conclude or forecast those countries may get well good portions of fresh capital inflows to according to the share of the cake from the multiples that tell us about the potential growth speed.
Distinguished guests, this is my last slide and I am very grateful for the opportunity to address you on behalf of Ata Invest and thank you for your attention.
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