SUSTAINABLE GROWTH STRATEGIES FOR TURKEY (2004-2006)

This project has been initiated collaboratively with TÜSİAD, and then has been executed by TÜSİAD itself.

The urgency of embarking on a sustainable growth path for Turkish economy became clear in the aftermath of 2000-2001 crises. Despite the high growth rates achieved in the years 2002 and 2003, Turkey’s average annual growth has been only 2.8 % in the last decade. This low average of growth ratio has also been subject to excessive fluctuations. It has not been uncommon to see the economy growing 8 % in one year and contracting 9.5 % in another year. In this process, Turkey fell behind the average rate of global productivity rise, and growth was based on capital mobilization, while employment and total factor productivity (TFP) increases lagged. In the 1990-2000 period, the average increase in capital stock has been 7.6 %. During the same period employment and TFP increases have remained at 1.1 % and 0.5 % respectively. The problem of unemployment has aggraveted as a result of this low employment creation. This negative performance affected Turkey’s international competitiveness and its place in the world rank in terms of per capita income negatively. Achieving a rapid but sustainable growth performance during the coming 10 years has to be Turkey’s priority to address the following issues:

  • Debt dynamics,
  • The employment of rapidly growing population,
  • To shift the large population in agriculture to other sectors,
  • To solve the problems of income distribution and regional disparities,
  • To catch-up the EU per capita national income levels in the membership process.

The Aim of the Project

The economic reforms which were put into force in the aftermath of the 2000-2001 economic crises were necessary to create a rapid growth, but they are not sufficient for its sustainability in the medium to long term. Thus, this project aims 1) to explore the necessary and sufficient conditions to preserve the sustainability of high growth rates in the long run 2) and to explore the ways of constructing a dynamic strategy with general and specific dimensions.

In this study, by looking at the forthcoming decade, the conditions to maximize macroeconomic stability, employment, and productivity, in order to create a high and stable growth environment is examined and some policy suggestions are made. The sectoral dynamics and development perspectives are determined with the aim of maximizing the growth rate. Some policy proposals on the areas of employment, education, technology, foreign capital, foreign trade, competition, and intellectual property rights are developed to allow a rapid catch-up of the level of national per capita income in the year 2013 under the perspective of Turkey’s full membership to the EU. In the study, the experiences of other countries are taken into consideration, the development trends in global economy and the new trends in industry and technology are taken as exogenous factors.

Regional income disparities are also important determinants of sustainable growth. In this study these disparities and ways of reducing it are explored at micro and macro levels. This study ateempts to determine what needs to be done in the basic areas while laying out the figures of how growth in Turkey will be shaped in the forthcoming decade if these conditions are fulfilled.

8 reports has been published by TÜSİAD under the name of TÜSİAD GROWTH STRATEGIES SERIES, in the context of this project (Reports are  available only in Turkish).