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2018 | Buch

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Turkish Economy

Between Middle Income Trap and High Income Status

herausgegeben von: Dr. Ahmet Faruk Aysan, Dr. Mehmet Babacan, Dr. Nurullah Gur, Dr. Hatice Karahan

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book scrutinizes the last 15 years of exceptional growth in the Turkish economy, and presents a model for sustainable ongoing growth that has particular implications for other key emerging economies.
The growth of the Turkish economy in the 2000’s was based on two integrated fundamental factors: fixing deteriorating dynamics and implementing further reforms to stimulate economic activity. This basic formula led to pleasing rates of economic growth, fuelled particularly by domestic private investments along with revived consumption and exports. Driven by political stability established by single party governments in the post-2002 period, an improved economic outlook helped Turkey enjoy record levels of foreign investment, adding momentum to its growth story.
The Turkish experience in the post-crisis period implies that in order to achieve a fast and - more importantly - sustainable onward growth, the economy needs a new generation of structural reforms that simultaneously heal fragility and vitalize economic activity.

The papers in this book offer professional assessments and assistance - especially for policymakers, and present a new direction upon which the Turkish economy - and emerging markets - can progress successfully for a further 15 years.

Inhaltsverzeichnis

Frontmatter

On the Path to High-Income Status or to Middle-Income Trap: The Turkish Economy in Search of Its Future

Abstract

The growth episode of the Turkish economy in the 2000s was written based on two integrated fundamentals: fixing the deteriorating dynamics and implementing further reforms to stimulate economic activity. This basic formula led to attractive rates of economic growth, fueled particularly by domestic private investments along with revived consumption and exports. Integrated with the political stability established by single-party governments in the post-2002 period, the improving economic outlook also helped Turkey enjoy record levels of foreign investment, adding momentum to the growth story.

Ahmet Faruk Aysan, Mehmet Babacan, Nurullah Gur, Hatice Karahan

Political Economy

Frontmatter

The Role of the State in the Turkish Economy

Abstract

The role of the state in economic performance is critical for almost every country. This chapter reviews and assesses the effectiveness of the state in the Turkish economy over the last 15 years. A well-functioning state is key for Turkey to be prosperous and have a larger say in the global economy and for its citizens to have higher living standards. Turkey needs new investments and reforms to escape the middle-income trap. To make this happen, the state should undertake a number of important tasks, from industrial policies to institutional reforms. This chapter argues that making the institutional infrastructure more inclusive, implementing smart industrial policies, and improving the welfare state mechanism are the vital issues the state should focus on to take the Turkish economy to higher steps of the development ladder.

Nurullah Gur

Political Economy of Transformation of Capital Structure in Turkey: A Historical and Comparative View

Abstract

Comprehensive insight into the transformation of the Turkish capital structure implies understanding the historical basis of the issue, which should first include center-periphery relations that arose mainly as the historical tension between two blocs of Turkish political-economic forces. In this way, one may follow the footsteps of the breakthrough period initiated mainly by the Özal era in the early 1980s, whose main policies were aimed at effecting a transformation grounded on political and economic liberalism and its direct/indirect reflections for a newly emerging capital group mainly based in Anatolia, along with the statistical rise of some new local cities/regions/corporations, and its political-economic content. In this framework, the two main interest groups of industrial and business associations, Turkish Industry and Business Association (TUSIAD) and Independent Industrialists’ and Businessmen’s Association (MUSIAD), appear more clearly in this historical process as representatives of the two different political-economic factions in terms of magnitude, volume, regional/geographic basis, mental and cultural codes/roots, and, hence, differentiated vision and structural realities.

Abdurrahman Babacan

Single-Party Governments as a Cause and Coalitions as a Consequence of Coups in Turkey

Abstract

Economic performance under coalition governments, especially under those involving both right- and left-wing parties, is not as good as under single-party governments. Investigating the 1950–2015 period historically, as well as empirically through descriptive statistics and regression analysis, it is shown that such governments in Turkey were created artificially by the military, using coups as a tool to design Turkish politics. The causes and consequences of such interventions are discussed. In particular, it is shown that adverse impacts of coups in Turkey were not restricted to the periods of military rule but continued far into the future through the chain of coalition governments they have engendered.

Ali T. Akarca

Between Risks and Opportunities: Social Policies in Contemporary Turkey

Abstract

This study analyses Turkish social policies in the 2000s in relation to welfare regime discussions in the literature. Unlike many OECD countries where social policy expenditures have been cut back, Turkey has experienced significant improvements both in social expenditures and the quality of social provisions. Based on a nation-wide empirical investigation, this study aims to understand the effects of various welfare players, particularly social policy institutions, on welfare distribution and citizens’ welfare perceptions and satisfaction levels. This paper claims that although important improvements have been made toward achieving a sustainable social policy strategy in the 2000s, a new social policy strategy is needed to establish a sustainable welfare regime in Turkey.

Mehmet Fatih Aysan

Turkey’s Struggle to Achieve High-Income Status Through Adaptation to the Knowledge Economy

Abstract

Mid-income countries must restructure their economies fundamentally to reach high-income levels. This restructuring process requires the most effective use of national resources, particularly higher education and national innovation institutions, among others. Only a handful of countries can achieve the requirements of economies of scale regarding the allocation of scarce funds to research and development (R&D) as is done by giant corporations, which channel billions of dollars to R&D; thus, within this competitive environment developing nations must concentrate on certain sectors. This study takes a political-economy approach to analyzing Turkey’s development policies with a special focus on its higher education institutions and national innovation system. Additionally, it aims to elaborate on its chances to escape the middle-income trap when making necessary reforms to reach higher rungs on the knowledge economy ladder.

Halil Kürşad Aslan, Murat Aslan

Financial System

Frontmatter

Financial Openness, Financial Stability, and Macroeconomic Performance in Turkey: A Comparative Perspective

Abstract

Although economic theory argues that financial openness promotes economic growth, several experiences in developing countries do not support this theoretical reality. Turkish experience is one of the best examples since Turkey suffered three financial crises in 1994, 1998–1999, and 2000–2001, following the liberalization policies implemented through the 1980s, but managed to improve economic outcomes dramatically in the post-2001 period. This is mainly due to more effective fiscal and monetary management, strengthened banking regulation, and conservative banking practices pursued over the last decade and a half that significantly contributed to greater financial stability. Hence, this paper argues that to raise the potential benefits of financial openness, particularly in emerging countries, it should be implemented in a well-designed, effective supervisory and regulatory framework and in a sequenced manner.

Ali Ari

Capital Inflows and Banking in the Turkish Economy

Abstract

We examine the developments in the Turkish banking industry in the context of capital and financial inflows specifically focusing on cross-border banking liability. First, we analyse how the Turkish economy, as an emerging market, has been affected by capital and financial inflows. Against this backdrop, we describe the transformation of the Turkish banking sector, paying special attention to the post-2001 period. In particular, we also investigate the impact of cross-border liability on the performance of Turkish banks. Finally, we evaluate the current outlook of the Turkish banking sector and offer some policy recommendations.

Resul Aydemir, Gokhan Ovenc

Turkish Banking Industry: A CAMELS Analysis

Abstract

In this paper, the Turkish banking system is assessed using a CAMELS approach with a focus on recent financial developments. The analysis shows that the return on assets and return on equity of the Turkish banking industry are relatively at a satisfactory level. An increase in the profitability would strengthen capital and a slowdown in the loan growth rate limits the risk-weighted asset growth. The Turkish banking system continues to remain resilient to interest rate shocks and maintains its resilience to exchange rate risk. Both opportunities and challenges of Turkey’s financial industry are also discussed in this paper. As an opportunity, there is ample room for the development and diversification of financial markets, institutions, and instruments. However, relying mostly on the banking sector, increasing the credit-to-deposits ratio, tightening global liquidity conditions, and depending on foreign capital inflows are regarded as important challenges for the Turkish financial sector.

Muhammed Habib Dolgun, Lokman Gündüz

Modern History of Islamic Finance and a Strategic Roadmap for Its Development in Turkey

Abstract

With total assets of around US$2 trillion and ongoing double-digit growth – despite the global financial crisis – many financial centres have announced further initiatives to raise their profile in the Islamic financial market. Although opportunities in Islamic finance have recently attracted the attention of many financial centres, Turkey has been providing Islamic financial services for more than 30 years. However, although Turkey is ranked second in terms of GDP among Muslim majority countries, its share of total Islamic assets is around 3 per cent. This chapter will discuss the challenges that the Islamic finance industry has encountered and provide a general framework for designing Islamic financial services industry development initiatives and integrating these in their national financial sector development policies for Turkey.

Murat Yas, Hakan Aslan, Mucahit Ozdemir

Saving Behaviour in Turkey: Where Are We? And What Can We Do About It?

Abstract

The Turkish aggregate saving rate plummeted in the late 1990s and early 2000s and has not recovered fully since then. However, roughly one-half of the fall in the aggregate saving rate can be attributed to the rapid increase in education and health expenditures, which can easily be regarded as investments under broader saving definitions. In addition, one-third of the decrease in the private saving rate in the 2000s is spurious and the other two-thirds are mostly associated with durable goods consumption. Limiting credit expansion and improving credit composition, which can be done by, for example, developing Islamic financial instruments and creating wealth and pension funds, can induce households to save more and boost the productivity level of the whole economy.

Mevlüt Tatlıyer

Real Economy, Trade and Energy

Frontmatter

Towards Inclusive Growth and Sustainable Development: Science, Technology, and Innovation Strategies and Policy Implications

Abstract

This chapter focuses on the status of national science, technology, and innovation policies and their impacts on establishing the science, technology, and innovation (STI) ecosystem in Turkey following the global crisis of 2008 and provide policy recommendations to attain 2023 Goals for Turkey. Even though Turkey has made significant progress in building up its STI capacities since 2007, its economy continues to underperform in many key STI performance indicators compared to the Organisation for Economic Co-operation and Development and European Union averages. Turkey must introduce second-generation STI reforms and implement them immediately to become a highly productive and competitive economy through innovative and high-tech production and stable and high growth in the context of inclusive growth.

Emine Nur Ozkan-Gunay, Gozde Nur Kazazoglu-Sahin

Thinking About a New Industrial Policy Framework for Turkey

Abstract

The positive association between the manufacturing sector and economic growth suggests that manufacturing can act as an engine of growth. Successful industrial policy can be instrumental in breaking out of the middle-income trap in developing countries. Turkey has utilized different industrial policy sets with varying success. One outcome was that it has fallen into three middle-income traps since 1980. Currently, Turkey can be considered a medium-level industrialized economy open to competitive pressure from both developing and developed countries.

After reviewing the industrialization process in Turkey, this chapter assesses Turkey’s current level of industrialization. Next, it places Turkey and a set of comparators on a streamlined industrialization process map. Finally, it outlines the main features of an appropriate industrial policy for Turkey that would address the identified deficiencies.

Murat A. Yülek

Turkish Labour Market: Outlook, Key Challenges, and Policy Recommendations

Abstract

The persistently high unemployment rate in Turkey is the result of rigidities and structural issues attributable to both supply and demand factors. Most researchers and politicians have identified this high level of unemployment rate as one of Turkey’s most important socio-economic problems. Despite the relative success of the Turkish economy in terms of macroeconomic stability and high growth performance since the 2001 crisis, a failure to show any significant improvement in the unemployment issue has increased academics’ interest in this topic. To resolve the issues in the Turkish labour market, in recent years Turkey has been looking for ways to make its labour market more flexible. This chapter examines the Turkish labour market in detail and develops some policy recommendations to ensure long-lasting improvements in it.

Mehmet Huseyin Bilgin, Hakan Danis

Developing National Competence in Nuclear Energy: The Case of Turkey

Abstract

Turkey's economy has long dealt with current account deficit, which stems largely from its energy dependence on foreign countries. The insufficiency of national energy resources poses challenges for Turkey not only economically but also in terms of energy supply security. In this regard, Turkey recently launched plans related to nuclear energy, which will be carried out with international collaboration, as has been done by many countries around the world. On the other hand, nuclear power requires responsibility and careful thought regarding its sustainability. That is why any country attempting to develop a nuclear energy sector should adopt a comprehensive and well-formulated nuclear strategy. Turkey needs one, too. This chapter draws up a basic framework for the main pillars of a national nuclear strategy and underlines the critical considerations in developing competence in nuclear energy. Within this context, the discussion of Turkey’s case revolves around the factors to be developed.

Hatice Karahan

Beyond Planning and Liberalization: Foreign Trade and Industrial Development in Turkey

Abstract

After a brief open-economy experience during the 1920s, the Turkish economy could be regarded as state-controlled, planned, and partially closed for the following half a century. Trade, meanwhile, played a limited role and, aside from imported raw materials and exports of agricultural products, did not constitute a significant portion of economic activity. Industry developed – though limited – under a strategy of import substitution in 1960s and 1970s. Along with other major developing countries, Turkey has also witnessed a period of commercial and financial openness, export-oriented industrial production, and a growth model that led to high growth rates, increasing indebtedness at the state level, and budget and current account deficits in the 1980s. Political and macroeconomic instability for the whole 1990s led to unsteady growth cycles under unfinished industrialization and unregulated liberalization processes.

The AK Party period (2002–2017) represents a threshold for Turkish industrial, commercial, and financial expansion within a relatively stable environment that then faced several challenges. The first decade of the AK Party government is often described as the final attempt to do the unfinished job of liberalization, both political and economic. Between 2012 and 2017 however, Turkey’s industry, businesses at all scales, financial, and political institutions have been subjected to difficult stress tests, revealing unresolved structural issues. New challenges due to the changing nature of world politics, regional and internal dynamics, and global economic developments, however, are now forcing Turkey to revisit its export-led growth strategy based on reindustrialization, producing more capital-intensive goods with a greater technology component.

This chapter asserts that Turkey’s rising trade around the world could hold strong potential with respect to reindustrialization in strategic sectors. Lastly, a new phase of trade expansion should be launched over not only employment but also the development of a high-skilled labor force, proprietary technology in strategic sectors, and sustainable finance.

Mehmet Babacan

Challenges of Turkish Family Businesses Related to Effective Management Strategies

Abstract

Interest in family businesses has recently been on the rise in Turkey. The main reason for this is that family firms dominate business life and make a big contribution to job creation and exports. However, running a family business poses intrinsic human dilemmas and unique challenges. Family dynamics tend to affect business dynamics and vice versa. Managing family relationships is an important characteristic of a family business. Managed effectively, a family business offers rewards on many fronts; if managed poorly, the business, including the family, may face many problems, leading to bankruptcy. Therefore, it is important to determine predictors of family business sustainability for the benefit of both the economy and the families owning firms.

Huseyin Cirpan, Nihat Alayoglu

Backmatter

Titel: Turkish Economy
herausgegeben von: Dr. Ahmet Faruk Aysan
Dr. Mehmet Babacan
Dr. Nurullah Gur
Dr. Hatice Karahan
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-70380-0
Print ISBN: 978-3-319-70379-4
DOI: https://doi.org/10.1007/978-3-319-70380-0