Economic Power and Asymmetric Economic Interdependence

A. Primary Indicators of Economic Power

i). Current GDP

According to the analytical framework, in order to define which of the two rivals has greater economic power, it is critical to take into consideration not only the primary but also the secondary indicators of economic power. The first is Gross Domestic Product (GDP), however, it is also important to highlight the differences regarding the population and territorial breadth. More specifically, Greece’s population is 10,775,643 (CIA, 2015) while Turkey’s is 79,414,269 (CIA, 2015) which is almost seven times the Greek population. Also, regarding territory, including all land and water areas Greece is in ninety-seventh place with 131,957 sq.km.(CIA, 2015) while Turkey is in thirty-seventh place with 783,562 sq.km. (CIA, 2015) which is again, seven times larger than Greece. As illustrated below, Figure 18 indicates the general development of the states’ economic power.

194 Figure 18: GDP, current USD

Source: World Bank (a), 2015

More specifically, from 1980 to 2000 the rates of GDP between the two countries were close, especially in the years 1980-1990 and 1994-1996. However, from 2000 onwards, Turkish GDP more than doubled compared to Greek GDP. For example, in 2000 Greek GDP was 130 billion USD while the Turkish GDP was 260 billion USD approximately. Fourteen years later, in 2014, Turkish GDP increased by 200% compared to 2000, reaching 799 billion USD in contrast to Greek GDP, which increased by 81.9% and reached 237 billion USD approximately. In addition, Greek GDP growth had fewer sudden fluctuations than Turkish GDP growth, however from 2009 to 2014 it further decreased by 27.9% while Turkish GDP increased in the same period by 30.1%, meaning that the more Greek power was diminishing, the more Turkish power was increasing.

ii). GDP Growth

GDP Growth indicates the configuration of a state’s economic power, which is to say how much two rivals increased or reduced their power. Figure 19 below indicates GDP Growth between the two adversaries. More specifically, the period from 1994 to 2007 Greek GDP growth ranged from 2 to 6% while Turkish GDP growth in the same period ranged from -4.7 to 4.7%, meaning that the Greek economy was steadily increasing in contrast to the Turkish

0,00 100.000.000.000,00 200.000.000.000,00 300.000.000.000,00 400.000.000.000,00 500.000.000.000,00 600.000.000.000,00 700.000.000.000,00 800.000.000.000,00 900.000.000.000,00

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Greece Turkey

195 one which seemed to be more unstable, especially between the years from 1989 to 1994. In addition, from 1996 to 2008, Greek GDP growth had fewer fluctuations than that of Turkey, meaning that the distribution of economic power was more stable and, therefore, more effective. However, from 2008 to 2014, the Greek percentages were negative, due to the financial crisis of 2007 and in 2011 reached -8.9%, while the Turkish figure was 8.8%.

Nevertheless, Greece managed to increase its percentages, reaching in 2014 the 0.8% in contrast to Turkey, which reached 2.9%.

Figure 19: GDP Growth, (%)

Source: World Bank (b), 2015

iii). GDP per Capita

One more significant indicator is GDP per Capita which indicates the relative performance of each rival, since a rise in GDP per capita entails a rise in productivity. Figure 20 illustrates another important indicator, GDP per Capita, According to this Figure, Greek GDP per capita is much higher than the Turkish one, especially between the years from 2002 to 2010. In 2002 Greek GDP per capita was 13,903 USD and in 2010 reached 26,863 USD, meaning that it rose by 93.2%. Turkey, on the other hand, managed to raise its rates; nevertheless they remained lower than the Greek ones.

-10 -5 0 5 10 15

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Greece Turkey

196 More specifically, in 2002 Turkish GDP per capita was 3,576.2 USD while in 2010 it had reached 10,135 USD, meaning that it had risen by 183% approximately. Consequently, from 2002 to 2010 Turkey doubled its rates compared to Greece, despite the fact that they were lower. It is also noticeable that Greece had higher rates the previous years. More specifically, from 1980 to 1996, Greek GDP per capita rose from 5,915.4 to 13,685,3 USD, meaning that it rose by 131.3%. Turkish GDP per capita, on the contrary, rose from 1,566.7 to 3,053 USD, meaning that it rose by 94.8%. Thus, from 1980 to 1996 Greece had higher rates, both in terms of GDP per capita and increasing rates and, from 2002 to 2010, Turkey remained in the second place, however it doubled its rate of increase in relation to Greece (Kotios and Petrakos, 2003).

Figure 20: GDP per capita, current USD

Source: World Bank (c), 2015

iv). Foreign Exchange Reserves

Foreign exchange reserves are also an important indicator because they show the economic power of each country and their capabilities to react in order to protect their currency and consequently their economy. Figure 21 illustrates the total reserves of each rival. According to the data of the World Bank, from 1980 to 1999 both countries had almost the same value of foreign exchange reserves, however, from 1999 onwards Turkey raised its reserves by 421.5%, reaching 127.4 mil. USD in 2014. For Greece on the other hand, the value of its

0 5000 10000 15000 20000 25000 30000 35000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Greece Turkey

197 reserves decreased by 74.4% instead of increasing. More specifically, in 1999 the value of the Greek reserves was 19.3 mil. USD and then started decreasing reaching 6.2 mil. USD in 2014.

Figure 21: Total Reserves (including gold), in current USD

Source: World Bank (d), 2015

A. Secondary Indicators of Economic Power

i). Trade Balance

Balance of trade has to be taken into account as a secondary factor of economic power because this indicator shows the state's international transactions, since it is the largest component of the balance of payments. Figure 22 below indicates the Greek and Turkish balance of trade in goods and services.

More specifically, the Greek balance of trade from 1974 to 2014 was negative with the lowest figure in 2008, which was -43,229 million USD and the highest in 1974, -4,278 million USD. However, from 2009 onwards, Greece’s trade deficit further diminished compared to previous years, reaching -6,830 million USD, meaning that from 1974 to 2003, Greece’s trade deficit increased by 656.7% and from 2004 to 2013 decreased by 75.8%, but without having a trade surplus.

0,00 20.000.000,00 40.000.000,00 60.000.000,00 80.000.000,00 100.000.000,00 120.000.000,00 140.000.000,00

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Greece Turkey

198 On the other hand, Turkey’s balance of trade was not negative, however, from 2001 its trade deficit started increasing, reaching the lowest figure of -55,597 million USD in 2011. Despite the fact that there was a small improvement from 2008 to 2009, Turkey’s trade deficit continued to be higher compared to that in 2008, reaching -14,335 million USD in 2014. That is to say that Turkey had a trade surplus from 1974 to 2002 but from 2003 onwards only trade deficit.

Figure22: Greek and Turkish Balance of Trade (goods and services in millions USD)

Source: OECD (a), 2015

ii). Exports as a percentage of GDP

Nevertheless, these percentages do not show anything regarding the balance of relative gains between Greece and Turkey nor can they be compared since they correspond to different economic variables, unless they are estimated as percentages of the corresponding GDP of each country. More specifically, exports as a percentage of GDP indicate which of the two rivals managed to raise its power and consequently its relative gains, against the other. Figure 23 below illustrates exports as a percentage of GDP for each country.

More specifically, the value of Greek exports as a percentage of its GDP was higher than Turkey’s and from 1974 to 1993 the contribution of Greek exports to its GDP was larger than Turkey’s, reaching 21.3% in 1981 in contrast to Turkish exports, which reached 7.4% of its

-60.000 -50.000 -40.000 -30.000 -20.000 -10.000 0 10.000 20.000 30.000 40.000

1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Greece Turkey

199 GDP in the same year. However, from 1994 to 2010 one can notice the reverse result. Turkey raised the value of its exports reaching the highest figure of 27.4% in 2001, in contrast to Greece, which, although its value of exports was lower as a percentage of its GDP, had an upward trend, overcoming again the Turkish figures from 2010 onwards. That is to say that Greek exports rose from 22.10%, in 2010, to 33% in 2014, while Turkish were rose from 21.20% to 27.70% respectively.

Figure 23: Exports (%) of GDP

Source: OECD (a), 2015

Summarizing, according to the primary indicators of economic power such as GDP, GDP growth and the Foreign Exchange Reserves, Turkey has better and higher rates than Greece while the latter only has higher rates in GDP per capita. Regarding the secondary indicators of economic power, the balance of trade and exports as a percentage of GDP, it is not clear which of the two is in a better place, since they both hold first place and therefore, one cannot accurately determine which of the two rivals is more powerful. Therefore, taking into consideration the fact that Turkey has higher rates than Greece in three of the four primary indicators of economic power and Greece comes first in only one primary indicator, we conclude that Turkey has greater economic power than Greece.

0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GREECE TURKEY

200 B. Indicators of Economic Interdependence

i) Trade

Although Greece tried to raise the levels of its economic power focusing on exports, the balance of trade with Turkey was negative. Figure 24 below shows one of the most important indicators of economic interdependence, which is bilateral trade between rivals. More specifically, the balance of trade did not have large deviations regarding the value of imports and exports, since both were at low levels. Nevertheless, from 2001 to 2010 the imports from Turkey exceeded exports, reaching 2,541,19 mil. USD in 2008 while exports, in the same year stood at 1,328,96 mil. USD, almost half of the value of imports. From 2010 onwards, Greek exports to Turkey rose and their value reached 4,348.02 mil. USD although at the same time imports were decreasing, reaching 1,543.47 mil. USD.

Figure 24: Bilateral trade 1974-2014 Greece to/from Turkey (million USD)

Source: UNcomtrade (a), 2015 -2000

-1000 0 1000 2000 3000 4000 5000

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Value of Exports Value of Imports Balance of Trade