One tell tale here is that the factor apparently does not exist yet, if they were serious about production then you'd expect the factory to be ready to go at the moment of introduction, the way other car manufacturers - even small ones - do it.
Turkey does have its problems, but this announcement is far too small to make any meaningful dent in them, so I would expect this is mostly domestic posturing for the 2023 election cycle. The earlier they can ship and sell at a reasonable price, the better it is for their election odds.
That said, the airport is getting better, and considering making a car is well within Turkey’s manufacturing capabilities, I don’t see a reason why it would be a stretch.
(I certainly wouldn’t buy one for the first 10 years though.)
That does not always imply that the Turkish Central Bank is doing it because of his reasons, but Erdogan is remarkably like Netanyahu in that he knows well what is going to work on his audience, and at that time, this did.
And Turkey needs higher rates. The rate has been far below the natural rate for way too long. In capital markets, you saw Turkish companies make all these crazy acquisitions (in addition, to being forced by the govt into splashy infrastructure projects in areas that supported the govt)...the bust from this will be incredible (the only leverage Turkey has is that French/German banks are neck deep in this debt). Lowering rates is just prolonging the inevitable (the majority of Turkey's corporate sector is already functionally insolvent).
sigh
It's a tool for Turkey because they control their own currency, which gives them an advantage over potential European manufacturers who are tied to the Euro and have much less flexibility.
You can only lend money to people (or States) you see as equals. Large scale lending essentially ties your economies together (like the US and China).
I highly recommend Debt: The First 5,000 Years by David Grabber. He does a great deep dive into the history of debt (both personal and with States). It's an amazing read.
Debt can also be a thinly disguised bribe if there’s no real expectation that it’s ever going to be paid back. That’s how most lending to extremely poor countries works. The US or other “donors” lend money to the local tyrant to support domestically unpopular policy; the local tyrant pockets a large amount, distributes some to their cronies and some goes on the titular reason for the aid and at some point in the future the debt gets written off. Then the cycle repeats. The US does not view any other states as equals. China has lent a lot of money to Sri Lanka and Cambodia among others. It does not view either as an equal.
> I highly recommend Debt: The First 5,000 Years by David Grabber. He does a great deep dive into the history of debt (both personal and with States). It's an amazing read.
It’s also riddled with factual errors, from saying Apple was founded by engineers working on their ok laptops or that the Fed isn’t part of the USG, among many, many others.
Long post on a small selection of the ways the book gets things wrong.
https://delong.typepad.com/sdj/2013/01/the-very-last-david-g...
In ten years, I’ll own it free and clear, a feat that would have been impossible if I was just flushing money down the toilet in rent.
Ditto with national debt. If I borrow a billion dollars and provide health care, education or defend the state, what value am I allowing to be created?
That's using debt as a tool to make more money than you could have made if you didn't have access to credit to buy the house.
Or you borrow some money, build a car-factory, sell some cars, pay off the debt, and then have an income stream you couldn't have had without having access to credit to pay to build the car-factory.
Almost any investment will produce a greater yield than the interest cost of the mortgage because the mortgage is secured debt. A mortgage might cost 3% while stocks can return 7-10% or more.
In this scenario, taking on the debt even though you don’t need to is financially advantageous most of the time. In this sense debt is a tool.
Debt is also a tool that lets you afford a house that you can’t buy with cash on hand but where your income is easily enough for principal + interest. What’s better: a) saving for 30 years after you start working and buying a house in cash (maybe paying higher rent that whole time?) or b) taking on a mortgage, getting your house now (as soon as it’s responsible), and paying it off over 30 years. Most people will choose the latter.
Thus debt is a tool that also allows you to buy things far sooner (in life or business) than you could afford to with cash.
There are other things that can be done with debt like borrowing against existing assets (to avoid having to liquidate the entire asset just to get a little cash) or borrowing against expected revenue streams and so on. Most of these tools permit greater economic growth than is possible without.
The comment you’ve copied from YouTube demonstrates a lack of basic understanding of economics. Turkey’s debt load is typical of a country its size and furthermore debt itself is not a bad thing, it is a financial tool like any other. I do agree with the political aspects mentioned, however, the fact that it is also a political tool doesn’t necessarily mean it’s actually not being built.