Economic impact of Turkey’s restricted internet access

Originally appeared on Bosphorus Consulting on 02 April 2014

A lot has been made these past weeks of the threat to freedom of speech that the various obstructions to the Internet and social media sites in Turkey represent. These may also have potentially negative implications for Turkey’s image for investors as a modern and open economy. As Twitter was blocked in the country, comparisons were drawn with China, Iran and Eritrea, some of the other, very few, countries around the world that also block this social medium. Naturally, such comparisons are harmful to Turkish businesses as they follow allegations of corruption as well as mass social unrest – developments which carry associations of closed, murky markets.

Added to this, reliable access to the Internet and social media sites is hugely important as a key infrastructure component of an economy wishing to diversify. The sort of companies that Turkey would like to attract more of, for example, technology and international finance, rely ever increasingly on the Internet, and they want Turkey to promote Internet use, not restrict it. A report by Boston Consulting, “Turkey Online: How the Internet is transforming the Turkish economy,” (February 2013) illustrates just how significant the Internet is in transforming Turkey’s economy. Ironically, the Internet sector of the Turkish economy is outpacing GDP growth significantly, making it a key driver of Turkey’s economic growth (CNBCBig opportunities in Turkey’s digital economy,” 16 August 2012).

With these issues in mind, it is of added significance that restrictions to Internet access have been cited as further reasons for concern with regard to Turkey’s economy (The Financial Times Turkey clampdown on internet adds to economic woes,” 12 February 2014). At the same time, such actions threaten Istanbul’s reputation as a world-class city able to attract creative, highly-educated professionals and almost certainly call into question Turkey’s seriousness in transforming the city into an international financial capital.

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