Outlook Of Turkeys Economy

Published Date: 02 Nov 2017

Turkey's determined economic improvement programme reflect the degree of its challenge. The current programme, with the support of the IMF, is due to end by finish. Until then, the public sector main extra target be around 6.5% of GNP to flat out the high public debt. Reduction of inflation to solitary digit over the medium term, and the foreword of formal inflation target are also predictable.

The structural reform are mostly meant at scale down the public sector, additional intensification the financial sector, in addition to ornamental the place of the private sector. during 2004, state banks, the sugar company, Turk Telekom, the state control on top of alcoholic beverages, input assets in the power sector, plus state-owned petroleum refinery are to be privatized. It is hope that the privatization, jointly with the new rule on foreign investment, will cover the way for an add to in FDI inflows equal with the country's potential.

Turkey's long-term strategy for the period 2001-23, envisage promote an export-oriented, technology-intensive production structure, by means of stress on high-value-added manufactured products plus services. The aid of manufacturing as well as services to the economy are to add to slowly to 30% plus to 65%, respectively by 2023. This is to be achieve at the expense of agriculture, whose split in GNP is predictable to drop to 5% by 2023.

In the long word, it is also predictable that the ratio of sum investment expenditures to GNP will add to from about 22% during 2000 to about 27% within 2023, with the share of the public sector in sum investments lessening from 30% to 10% by the end of the era. Public investment is put to be intensify in education, health, plus R&D through 2001-23, while those on energy, transport, plus infrastructure are to be maintain at their current level awaiting 2010, plus be steadily abridged afterwards.

The long-term strategy is reflect in the eighth five-year growth plan, for the period 2001-05, beneath which the share of agriculture inside Turkey's GNP is predictable to carry on to fall, plus the aid of manufacturing plus services are predictable to add to. entirety asset spending is also predictable to increase by 6.7% per year on standard through 2001-05.

ECONOMICAL GROWTH OF TURKEY

Economic growth in Turkey has confront many obstacle over the past decades. in the past since the 1950s, the country has suffer serious disturbance to its economy concerning every 10 years. during 1994, owing to excessive public expenditure plus worsening of macro-economic fundamentals, the country's economy face one of its most horrible recession up to that time, bringing an end in the direction of 13 as the crow flies years of enlargement. though, the economy bounce back powerfully in excess of the after that 3 years, rising by over 8 percent (OECD, 2010 fact book). during 1998, hold up returned as a consequence of the Asian plus Russian monetary crisis.

inside 1999, two catastrophic earthquakes, measure 7.4 and 7.2 on the Richter scale, hit northwestern Turkey right in the center of its industrial heartland, cause Turkey to undergo its worst reduction in more than a few decades. Ten years ago Turkey's economy was once again in chaos. Inflation was very high plus its banks were on the verge of fall downward. By the 2000-1 liquidation crises, the nation's currency misshapen, the banks had to be rescue, public debt amounted to 74% of GDP (IMF, World Economic Outlook Database), plus for the 18th time, the IMF was asked for help.

Since then, Turkey's economy has enter an era of far above the ground enlargement plus structural improvement. A complete reform program, which encompass an swap drift speed, financial-sector management plus privatization, led to important economic growth with an annual GDP growth rate of 6.8% between 2002-2008, compare to an yearly standard of 4% in the 1990s3. The private sector grew significantly in new years, but the government motionless plays an important role in leading industries such as banking, transport plus communications.

The price rises rate cut down to significant lows, attainment 6.4% during the past year compared to 75% into the 1990s (Turkish Statistical Institute, "Turkstat"). important improvement in financial plan management was introduce, plus government debt decline considerably from 76% of agement was introduce, plus government debt decline significantly from 76% of GDP within 2001 to about 35% in the second section of 2010 (IMF).

TURKEY'S POLITICAL ARENA

The political state of affairs has better as well. Turkey's politics second-hand to be unbalanced plus extremely unstable. Parties would form plus rapidly vanish, politicians would suddenly be banned, plus several times the army interfere plus detached the ruling government. However, all this distorted after the election of November 2002, when the solitary party government, led by the mildly Islamist Justice plus growth (AK) party of Mr. Erdogan's, was formed. It has been in authority still since. After over eight years of law by Mr. Erdogan's AK party, an collection of imposing political plus economic reform was implement. In adding, last September, Mr. Erdogan won an significant referendum enable him to add to government manage over the army plus judiciary system. The part that Turkey's following constancy theater in Turkey's overall market development is incontestable. up till now, the consequences of the September referendum have exposed that the country leftovers intensely alienated. Mr. Erdogan has also prove extremely partisan plus intolerant of criticism. liberty of the press in the past years is no longer taken for decided. This was obvious in the government's treatment of the country's biggest medium group, recognized as Dogan. After a few adverse articles, the media group establish itself the object of strangely energetic tax inspections, evocative of Russia’s action of the Yukuse oil company. Since then, press understand that it is foolish to criticize the AK party. In its 2009 progress report, the European Commission reprimand the government in excess of this incident.

Turkey has traditional physically influential ties to the Arab plus Muslim world which have been rising stronger under the management of the current government. These tie tell to domestic issues, for example, the taking away of the forbid on tiring a veil in state institution and universities, plus to foreign issues such as the failing family member with Israel. Turkey, which was largely unnoticed for a lot of years, at the present has a stronger attendance in the region, which has proven beneficial to economic growth. usually Turkey has relied mostly on exports to the West, particularly Germany plus the rest of Europe. But though the EU is still Turkey's biggest market, its share is lessening, in addition to exports to the Middle East and Iran greater than before appreciably. This has given Turkey right of entry to more diversify markets and lowered Turkey’s reliance on the economic recovery in Europe.

TURKEYAND THE GLOBAL FINANCIAL CRISES

Turkey's economy was strike by the new global financial crises more often than not through trade channels, location back trade with Turkey’s chief trade associates in the European Union, and it resulted in a pointed drop in exports. though capital inflows thin, plus private investment plus the overwhelming of tough merchandise decline, there was no basic damage to Turkey’s economy. Due to the reform in the Turkish financial division plus tighter rule, Turkey's economy recovered swiftly, plus enlargement during 2010 was predictable at in excess of 8% (IMF), mostly credited to growing home order.

price rises was just underneath the 2010 target, in addition to capital inflows intensify driven by wide interest rate gap in addition to greater than previous to political confidence. during the 1990's, foreign direct investment was organization at fewer than 1$B a year other than by 2007 foreign direct investment reach an all-time far above the ground of 22$B. though, the high levels of FDI have decline and amounted to fewer than 9$B during the past year (OECD). A important rise in FDI in the near prospect is not probable as more than 80% of FDI comes from European country. while FDI has decline, other yet more unstable investments (portfolio investments in addition to debt securities investments) have rise due to low CDS spread. In the Istanbul stock exchange more than two-thirds of the stocks on are now owned by foreign investors4. though this is a sign of worldwide self-assurance in Turkey’s open markets, it also raise the prospect that foreign cash is fueling an investment bubble that could end poorly if foreigner exit the market as rapidly as they enter.

INDIA-TURKEY RELATIONS:

Turkey

India

GDP Total

USD 1.073 trillion

USD 1.9 trillion

GDP /Capita Income

USD 9,500

USD 1,340

Population

73.6 million

1.2 billion

Major Trading Partners

EU (46.3%), Iraq (5.3%),

UAE (13.6%), China (12%),

Russia (4.1%), USA (3.4%)

USA (10.1%)

Bilateral Trade

Volume: USD 6.6 billion (Jan-Nov 2011)

India’s exports: petroleum products, clothing and apparel,

aluminum, cars, mobile handsets

Turkey’s exports: marble, textile, machinery, copper ores,

inorganic chemicals, jewelry

Investments

Indian investments in Turkey: railway construction, pipelines,

hydrocarbons, IT services

Turkish investments: tourism, textile products, construction

Recent High level Visits

Prime Minister Erdogan (2008)

President Gül (2010)

Vice President Ansari (2011)

Key Agreements

Bilateral Investment Promotion and Protection Agreement 1998

(BIPA)

Avoidance of Double Taxation and the Prevention of Fiscal

Evasion 1997 (DTAA)

Institutional Arrangements

Joint Commission for Economic and Technical Cooperation

Joint Business Council

Joint Study Group for Free Trade Agreement feasibility

Education and Culture

25 slots offered to Turkish students under Indian Technical and

Economic Cooperation (ITEC)

MOU signed between Ankara University and JNU and Bogazici

University and Shantiniketan

Language professors are on deputation through the Indian

Council for Cultural Relations

Defense

High level visits: Chairman of Chiefs of Staff Committee and Chief

of Army Staff Air Chief Marshall V. P. Naik (2011)

Chief of Naval Staff Admiral Nirmal Verma (2011)

Diaspora

A small group of working professionals are found in each country.

ENSURING SUSTAINABILITY OF HIGH GROWTH

Turkey has restore macroeconomic constancy plus has very much better the resilience of its economy. Since 2001, the Turkish economy has bounce back from a pointed disaster plus entered a era of far above the ground growth and important structural alteration. Annual growth averaged 7.5 percent plus output greater than before by more than 40 percent during 2002-2006. This optimistic presentation is due in huge part to the government’s continued promise to sound economic policy as well as a kind global economy. Strong fiscal regulation plus tight financial policies help inferior inflation plus inflationary expectations in addition to get better debt sustainability. Substantial development has also been achieve in reform the financial sector, civilizing the business environment, plus reform the public sector. Sound policies, a positive international environment plus the forecast of EU accession have help Turkey expand its export ability plus attract large assets inflows. Vulnerabilities remain, as established by the crash on Turkey of the May-June 2006 chaos in international markets. Even so, the incident also established the economy’s pliability to economic shock, as the authorities’ reply by tapering financial policy and maintain fiscal regulation established a firm promise to macroeconomic constancy.

However, challenges remain.

achieve income meeting with advanced countries will need a continued period of high economic growth. The 7.5 percent annual standard growth rate achieve during the last five years of recovery may go beyond show the sustainable growth level of possible output once the production hole has been stopped up. so, the outlook for growth depends on the aptitude to add to the level of asset—as well as its competence—above the historical averages plus on achieve stronger employment age group combined by means of senior labor output.

following reaching 6.3 percent of GNP during 2005, the CAD-to-GNP ratio additional increased to 8.1 percent within 2006 plus remain high at an predictable 7.8 percent in 2007. Turkey’s large CAD poses a danger to the sustainability of high growth—although the excellence of its finance has better, with an add to in the split of FDI plus other non-debt creating source to above 50 percent.

Inflation in progress to choose up in 2006, jump to a height of concerning 10 percent by the end of the year, which was considerably senior than the bureaucrat target of 5 percent. Annual price rises at 8.4 percent at end-2007 was more than twice the 4 percent target. bring inflation shut enough to the under attack level of 4 percent in 2008 seems demanding.

Turkey has been one of the major beneficiary of the plenty capital flows heading for to emerging markets over the history a small number of years. big capital flows will support growth but may also make macroeconomic imbalance.

The Challenge of Sustaining High Growth

opposing to other up-and-coming countries, Turkey knowledgeable small income convergence over the past decades but is now in a improved place to attain it. Turkey’s growth in excess of the last decades has been unstable and underneath that experiential in other up-and-coming countries. sluggish labor output growth in addition to moribund labor utilization banned Turkey from realize its growth possible. The consolidation of the fiscal balances, the decrease in price rises, the improvement in macroeconomic constancy, plus the wide range of structural reforms put Turkey in a improved position to go faster enlargement on a sustained basis.

Higher plus more well-organized investment will be significant to maintain high growth rates. behind growth tax of 7 percent will require the investment to GDP ratio to add to above 30 percent, beneath the supposition that the TFP growth tax are not leaving to increase radically from the last decade’s standard of 1.3 percent. China, by comparison, invests more than 40 percent of GDP. Raising Turkey’s investment rate to over

% range will need not merely a important increase in the national economy rate other than also sustaining large CAD for long-drawn-out periods. The competence of speculation also greatly matter for behind far above the ground GDP growth: TFP growth inferior than 2 percent would need even higher investment ratio in order to attain significant meeting, hence making external equilibrium more hard to continue.

The composition of investment too matters for growth sustainability. far above the ground investment does not of necessity lead to senior growth if it is intense in the non-traded goods sectors. Such investment boost domestic demand—in addition to for the time being also employment—but has small crash on creative ability in export as well as import-competing sectors. It finally leads to even better CAD and rising foreign money due. By difference, private sector investment in creative capital in tradable goods sectors improve the sustainability of the CAD as it can add to its decrease in the future. A important move in the work of art of investment towards tradable sector has taken place from the time when 2001 (Figure 4). This trend, if sustained bode well for the sustainability of growth.

Managing Large Capital Flows

Large capital inflows will support growth but may also make macroeconomic imbalance.

Turkey has by now been one of the major beneficiary of the plenty capital flow heading for to up-and-coming markets over the past few existence plus although international investment portfolios may undergo some rebalancing in the future—is probable to stay an good-looking destination over the average term. Capital inflows will have fun a key role in the finance of growth, but they can also start trouble by leading to swap rate misalignment; hopeful bank lending boom that result in a refuse in loan excellence; or ignite asset-market boom that set the stage for troublesome bust.

though there is no ideal answer to the challenge that capital actions pose in emerging market economy, a number of partly effectual measures might be adopted. Experience suggests three complementary ways of managing the penalty of large capital flows: (i) sterilized interference; (ii) tapering of financial rule; and (iii) fiscal change. Exposure in the direction of the impact of assets flows could also be mitigate by tax policy or capital wheel, but such measures raise the cost of finance, hold back investment, plus are hard to combine with a promise to market-friendly reforms.

Whether clean interference is suitable plus ordered hinges on a ruling concerning why the exchange rate is moving in the first put. If the movement in the exchange rate reflect an extraneous, passing add to in market instability, then clean interference to make sure sufficient market liquidity and arranged conditions will be suitable. If, on the other hand, the movement in the swap rate is not irrelevant but reflect an strengthening of domestic inflation, then clean interference alone will be futile plus counterproductive. In practice, drawing this difference is frequently very hard.

Tightening regulations affecting the banks and markets on the receiving end of capital inflows can ease the burden on monetary policy. This technique has the strength of addressing some of the consequence problems deliberately linked with assets inflows-such as lend boom in addition to the resultant worsening in the standard excellence of bank loans. Turkey’s framework of bank rule, management, plus interference has been better but issues still remain. In the near prospect, input exceptional issue for the bank rule in addition to management Agency (BRSA) comprise further intensification of consolidate management; and further civilizing the ability to oversee banks’ risk organization technique in addition to models.. There also stay limits on the self-government of the BRSA. In sight of the fast credit expansion, stronger buildup of general loan loss treasury by banks would help restrain the risk.

maintain a tight fiscal policy is a input option for address the confront of capital inflows.

Fiscal consolidation reduces home demand, hence extenuating the expansionary crash of capital inflows. Turkey has implement an determined fiscal consolidation as 2001 other than a continuous attempt leftovers significant in excess of the average term to get better the excellence of public expenditures. The moribund structural main extra in 2004-2006 indicate that the economic posture has twisted pro-cyclical—a potentially unwanted growth at a time of broadening outside current account imbalance (World Bank, 2006, PER). A preferable option would be for the structural primary extra to be maintain unaffected throughout years of robust growth—a policy that would be reflect in an rising actual primary extra in amount to GDP

Working toward more believable policies, deeper and more healthy monetary markets, and a more steady and diversify economy is the best long-run answer to the challenge of large and unstable assets flow. The broader process of structural development can add to mitigating risk while enable the reimbursement from capital inflows. In adding, by increasing the flexibility of the economy it may satisfy the real swap rate reply to assets inflows—by, inter alia, raise the agility of supply of non-traded goods, in turn attenuating the inflationary belongings of shift in capital flows. structure deeper financial markets, more efficient fiscal procedures, and stronger policy institution, not to talk about implementation the long process of financial reform, is a long-term try.

SOURCES OF LONG TERM ECONOMIC GROWTH FOR TURKEY,

The growth knowledge of rising countries has been in receipt of rising notice in recent years. The experiential growth text has address this subject with cross-country study that look for to recognize the determinants of long-run financial growth. study that search for to tell the growth and meeting knowledge of individual country to various past episodes in addition to political proceedings are also flattering more extensive.1 One of the issue for conduct the latter type of study has to do with the distance finish to finish of age over which the growth experience is examine.

The growth knowledge of Turkey encompass a wide-ranging set of his-torical, political and economic proceedings. contemporary Turkey arose as of the ashes of the previous Ottoman Empire, which misshapen throughout World War I. The era in Turkey start with the declaration of the state in 1923 witness a change from a state-led financial scheme to one which has knowledgeable extensive deal in addition to financial liberalization during the 1980’s. Turkey today is characteristically cite among the large up-and-coming market economies that are fast becoming a major power in the world economy. yet, in new years Turkey’s economy has been overwhelmed by chronic political in addition to macroeconomic insta-bility that has led to a number of crisis, particularly in the second half of the twentieth century. The most harsh of these, a financial disaster, occur in 2001 but the economy managed to rebound strongly inside a few years. during December 17, 2005, Turkey also commence association talks with the European Union. though the first accord for cooperation between Turkey and what was after that the ordinary Market date back to 1963, together sides remained uncertain concerning Turkey’s addition. Turkey’s first request for membership in 1987 was turned down but it connected the European civilization union in 1996. After a reasonably winning completion of the customs union for one decade, formal talks for membership in the European Union began in 2006. Even an relaxed spectator would be intrigued by the huge number of factors in addition to influence that originate from such an experience. To economists and economic historians alike, the Turkish case certainly represent a very fascinating laboratory.

In this paper, we look at the determinants of long-term financial growth for Turkey over the period 1880-2005. We use a standard growth account-ing move toward that considers only the input of labor plus capital as well as one that openly allow for human capital (education). One of our innovation is that we replica the undeveloped sector using a production function move toward with input of land, work and capital. debatably one of the most important transformation that take place in the route of Republican the past was the increase in arable lands jointly with the automation of farming that began in the 1950’s.2 To quantify this alteration plus to examine its implication for Turkish output growth, we consider a two-sector model with an undeveloped and non-agricultural sector that also allow for the impact of human assets.

Another work of fiction characteristic of our psychoanalysis is that we make use of a new capital stock sequence date back to 1923. There exist a number of studies that work out TFP growth for the Turkish financial system for the post 1960’s period.3 However, we are not conscious of any study that use such a long capital stock series. These features of our learn allow us to look at the sources of growth for Turkey, that is, the impact of factor buildup in the agricultural and non-agricultural sectors, human capital, plus sectoral total factor output, that are base on longer sequence in addition to that allow a contrast with other studies that use a similar approach.

The remainder of this paper is as follows. In Section 2, we describe our data sources and discuss the periodization adopted in our study. In this sceton, we also present an overview of Turkey’s economic performance since 1880. In Section 3, we conduct a growth accounting exercise over the period 1880-2005 and also discuss the role of sectoral re-allocation in promoting growth over this period. Section 4 presents a set of puzzles regarding Turkey’s growth experience and also seeks to resolve them. Section 5 concludes.

Data and Sources

For most of the data working in this study, we relied on the official popu-lation, GDP, ground under farming series as in print by the State Institute of Statistics for the era since 1923. For the work force series we second-hand the Bulutay (1995) study which was in print jointly by the State Institute of Statistics in addition to the International Labor Office at Ankara. For the capital stock series we began with the Sayg ilı et al. (2005) study which goes back to 1972. We extrapolated this series back to 1923 using the investment series as in-cluded in the national income accounts plus the nationwide profits study for the era 1923-48 undertake by Bulutay et. al (1974) plus a depreciation rate of 4.2 percent yearly.

For the Ottoman era 1880-1913, we begin with the data compile and the national income estimates ready by Vedat Eldem (1970) for the years before World War I. These are more often than not base on the official Ottoman figures. We comprehensive these rear to 1880 utilizing inhabitants growth rates, rural-urban breakdown of the population, Ottoman agricultural censuses plus other rele-vant data. estimate for the assets stock for 1880 are derived by assuming rates of asset for the decades before World War I as given by Eldem

Our education variable is defined as the standard years of schooling of the labor force, ages 15-64 which is intended from the annual numbers of gradu-ates of schools and universities in Turkey as in print by the State Institute of Statistics plus the educational statistics of the Ottoman territory showing school staffing for different years. This number was less than 1 until 1948 and is currently close to 8.

We have chosen to divide these 125 years into five sub-periods. The Ot-toman period until World War I characterized by optimistic but self-effacing level of per capita income growth is the first of these. World War I and the War of

Independence (1919-1922) were periods of large inhabitants wounded plus large de-clines in GDP per capita followed by a rapid revival in the 1920s. Population of the areas comprising present day Turkey decline by 18 about percent during 1914-1924. We decided to choose 1929 for the end of this second sub-period as this was the year when pre-War levels of per capita GDP was attain for the first time after WWI. 1929 also noticeable the start of a new policy era as the Great despair ushered in new economic policies, protectionism and inward oriented industrialization led by the state sector. Our third sub-period, 1929 to 1950, comprises the interwar era and World War II. We chose 1950 to end this period and begin the next as this is the benchmark year in many study and also because the Turkish post-war revival was completed by this date.

Turkey’s Economic Performance Since 1880

Turkey’s overall economic presentation can be examine in a variety of ways. in the past, per capita incomes in Turkey plus the rest of the Ottoman Empire began to go up throughout the nineteenth century. however, the gap flanked by the high income country of Western Europe and the United state plus the emergent world, counting the Ottoman Empire, widen considerably throughout the century before World War I, owing to the fast rates of industrialization in the former collection. GDP per capita in the area within present-day borders of Turkey was about 1200 dollars in 1913 (in 1990 purchasing power parity attuned dollars as distinct by Angus Maddison in his new study; see

This was 29 percent of the level of GDP per capita in the high income countries of Western Europe plus the United States, intended on a population-weighted basis, plus 168 percent of the GDP per capita income in the rising countries of Asia, Africa in addition to Latin America, too intended on a population-weighted basis plus for the similar year.

Two world wars plus a great despair later, per capita income in Turkey within 1950 was more than 30 percent senior, at 1620 steady or inflation-adjusted dollars. This was equivalent to 24 percent of the per capita income of the high income country in addition to 188 percent of the per capita income in the rising countries. By 2005, GDP per capita in Turkey had reach 7500 dollars, an increase of more than five fold since 1913. This figure correspond to about 30 percent of the level of GDP per capita in the high income country of Western Europe plus the United States, plus about 225 percent of the GDP per capita income of the mounting countries for the identical year. In other language, average incomes in Turkey have greater than before at concerning the same rate as persons in high income country since 1913. Turkey has not been clever to close any of this large hole At the similar time, increases in average incomes in Turkey since 1913 have been somewhat faster than those in the rising world.

we give per capita GDP sequence for Turkey in addition to a figure of other region and continents as percentage of the average for Western Europe plus the United States for the period since 1913. This allows additional insights into Turkey’s family member economic record in the twentieth century. It shows that as its growth record was better than the averages for Latin America, Middle East and Africa as a whole, Turkey has lagged healthy behind

Southern Europe and East Asia since 1950. In small increases in per capita incomes in Turkey since World War I and also since 1950 have been shut to, but somewhat above, earth averages plus averages for the rising country. On the other side, the income per capita gap among Turkey in addition to the far above the ground income countries of Western Europe and North America was about the similar during 2005 as it was on the eve of World War I plus too during 1950.

War II period. We can give details this prototype with two comments. First, tax of per capita growth accelerate piercingly after World War II in all region of the world. Second, during the Turkish case, present was a very big decline in population (approximately 20 percent) throughout in addition to after World War I and still better declines in GDP plus GDP per capita (more than 40 percent) awaiting the early 1920’s; Even though by 1929 per capita GDP had return to pre-World War I levels, growth rates for output, labor and most other variables were unenthusiastic for the era 1913-1929 as a whole. As a result, GDP per capita growth rates for Turkey for sub-periods until WWII or awaiting 1950 are all below 1 percent per annum.

We also watch that both the late-Ottoman era correspond-ing to 1880-1913 plus the period start in 1929 show optimistic enlargement inside production plus the factor input. However, it would be useful to separate the former era from the subsequent experience of positive growth beginning after 1929 because these growth experiences correspond to two distinctly different political and economic regimes. The years between 1880 and 1913 can be characterized as the period of political and military disintegration of the Ot-toman Empire, culminating with its ultimate demise in WWI. By contrast, the period after 1929 represent the formation years of the Republic, with a series of political and economic innovations. Indeed, we see the impact of the new policies and institutions characterizing the Republican era in terms of the more than doubling in the growth rate of human capital and educational at-tainment for the population. Second, the late Ottoman era takes place within a global context of open trade and financial regimes whereas the period after 1929 witnessed a return to autarkic regimes world-wide. We return to these points in our subsequent discussion.

The period after World War II represents an era of better performance everywhere and especially in developing countries. The growth rate of output and factor inputs for Turkey are significantly higher after WWII. Table 3 shows that output grew at annual rate of 4.95% during 1950-1980, and 4% during 1980-2005. This corresponds to a per capita increase in GDP at rates above 3 percent during 1950-1980 and at rates above 2 percent during 1980-2005. A salient fact that arises from this comparison is the high rates of both physical and human capital after 1950. While etatism and interventionist economic policies have been credited with increased capital accumulation after 1929, we observe that the accumulation rates in physical capital between 1880-1913 and 1929-1950 are roughly comparable. It is only after 1950 that Turkey suc-ceeds in nearly tripling its capital accumulation rate compared to the previous period. Another noteworthy finding is that both the rates of physical and human capital accumulation slow after 1980. Considering the different sectors separately, we find that agricultural output increased most rapidly in the pe-riod 1950-1980. The reason is that the cultivation of arable lands reaches its maximum at the end of this period. After 1980, we note that the land under cultivation starts to decline. Likewise, we note that accumulation of physical in agriculture is the greatest during the 1950-1980 period. The beginning of this period coincides with multi-party elections and a shift of power to landed interests under Democratic Party rule. However, even after 1960 when the Democratic Party is depose in a military coup, investment in the agricultural sector proceeds at a rapid pace. We note somewhat ironically that the non-agricultural sector also shows the most growth during the 1950-1980 period: output averages 6.15% and capital accumulation profits at even a faster rate of 6.61%. As Turkey’s economy is open up to the rest of the world start in 1980, we see lower growth in non-agricultural behavior as well because lower capital accumulation.

These comments already give significant clue concerning the source of growth for the Turkish financial scheme as 1880. though, they do not cut off the crash of technical progress or total factor output from the remaining source of growth. These is critical since most new growth theories, whether they be based on endogenous growth or highlight the place of institutions, assign a key role to output or TFP growth. We at the present wind to this subject

POPULATION OF TURKEY

Turkey's population on the end of 1994 was predictable at 61.2 million (for a more recent population estimate, .This number represent an 8.4 percent increase over the 56.5 million enumerated in the twelfth quinquennial census, conducted in October 1990. The State Institute of Statistics (SIS) has predictable that since 1990 the country's inhabitants has been growing at an standard annual rate of 2.1 percent, a reduce from the 2.5 percent average annual rate record during the 1980s. Turkey's inhabitants during 1985 was about 50.7 million, and in 1980 about 44.7 million. In the fourteen years from 1980 to 1994, the inhabitants greater than before almost 37 percent.

Turkey's first census of the republican era was in use in 1927 plus count a total inhabitants of about 13.6 million. Less than seventy years later, the country's population had more than quadrupled. Between 1927 plus 1945, growth was slow; in sure years throughout the 1930s, the inhabitants in fact decline. important growth occur flanked by 1945 plus 1980, when the population greater than previous to almost 2.5 times. though the rate of growth has been slowing slowly since 1980, Turkey's average annual population add to is comparatively high in contrast to that of European countries. In information, member states of the European Union (EU--see Glossary) have cite this high population growth rate as good reason for delaying a decision on Turkey's long-pending request to join the EU.

The 1990 census is the most new one for which detailed arithmetical data are obtainable. That census revealed the family member youth of the inhabitants, with 20 percent being ten years of age or under About 50.5 percent of the population was male, plus 49.5 percent female. The average life expectation for females of seventy-two years was greater than the matching figure for men of sixty-eight years. The birth rate was twenty-eight per 1,000 population; the death rate was six per 1,000.

Population Density, Distribution, and Settlement

Population thickness has increased along with the comparatively rapid growth rate. For example, although Turkey had an standard of only twenty-seven population per square kilometer in 1950, this figure had nearly tripled, to 72.5 persons people per square kilometer, by 1990. Population thickness was estimated at 78.5 people per square kilometer at the end of 1994. According to the 1990 census, the most densely populated province included Istanbul, with 1,330 persons per square kilometer; Kocaeli, with 260; plus Izmir, with 220. The most lightly populated province included Tunceli and Karaman, with seventeen plus twenty-four persons, respectively, per square kilometer. Turkey's overall population thickness was less than one-half the density in major EU countries like Britain, Germany, and Italy.

Although overall population density is low, some regions of Turkey, particularly Thrace and the Aegean and Black Sea coasts, are thickly populated. The uneven population distribution is most clear in the coastal area stretch from Zonguldak westward to Istanbul, then around the Sea of Marmara plus south along the Aegean coast to Izmir. though this quarter includes less than 25 percent of Turkey's total ground, more than 45 percent of the total inhabitants live there in 1990. In difference, the Anatolian Plateau plus mountainous east account for 62 percent of the total land, but only 40 percent of the population reside present during 1990. The remaining 15 percent of the population lived along the southern Mediterranean coast, which make up 13 percent of Turkey's region.

In 1990 about 50 percent of the population was classified as rural. This figure represent a refuse of more than 30 percent since 1950, when the rural population accounted for 82 percent of the country's total. The rural population lived in more than 36,000 villages inside 1990, most of which had fewer than 1,000 inhabitants For managerial purposes, a village can be a small resolution or a number of dotted rural households, together administer by a village headman

By 1995 more than 65 percent of Turkey's population lived in cities, defined as built-up areas with 10,000 or more inhabitants. The urban population has been growing at a rapid rate since 1950, when it accounted for only 18 percent of Turkey's total. The main factor in the growth of the cities has been the steady migration of villagers to urban areas, a process that was continuing in the 1990s. The trend toward urbanization was revealed in the 1990 census, which enumerated more than 17.6 million people--more than 30 percent of the total population--as living in nineteen cities with populations then of more than 200,000. The largest was Istanbul, with a population then of about 6.6 million, approximately 12 percent of Turkey's overall population. Two other cities also had populations in excess of 1 million: Ankara, the capital (about 2.6 million), and Izmir, a major port and industrial center on the Aegean Sea (about 1.8 million). Turkey's fourth and fifth largest cities, Adana (about 916,000 in 1990) and Bursa (about 835,000), have been growing at rates in excess of 3 percent per year, and each is expected to have more than 1 million inhabitants before 2000. Gaziantep in the southeast and Konya on the Anatolian Plateau were the only other cities with populations in excess of 500,000 in 1990. The ten largest cities also included Mersin (about 422,000), Kayseri (about 421,000), and Eskisehir (about 413,000).

Migration

During the decade 1915 to 1925, the country experienced large population transfers--a substantial movement outward of minority groups and an influx of refugees and immigrants. The first major population shift began in 1915, when the Ottoman government, for a variety of complex and in some instances contradictory reasons, decided to deport an estimated 2 million Armenians from their historical homeland in eastern Anatolia (see Armenians, this ch.; World War I, ch. 1). The movement of Greeks out of Turkey, which began during the 1912-13 Balkan Wars, climaxed in the 1920s with an internationally sanctioned exchange of population between Turkey and the Balkan states, primarily. In accordance with the 1923 Treaty of Lausanne, Turkey accepted approximately 500,000 Muslims, who were forced to leave their homes in the Balkans, in exchange for nearly 2 million Greeks, who were forced to leave Anatolia. By special arrangement, Greeks living in Istanbul and Turks living in the Greek part of Thrace were exempted from the compulsory exchanges.

After 1925 Turkey continued to accept Muslims speaking Turkic languages as immigrants and did not discourage the emigration of members of non-Turkic minorities. More than 90 percent of all immigrants arrived from the Balkan countries. Between 1935 and 1940, for example, approximately 124,000 Bulgarians and Romanians of Turkish origin immigrated to Turkey, and between 1954 and 1956 about 35,000 Muslim Slavs immigrated from Yugoslavia. In the fifty-five-year period ending in 1980, Turkey admitted approximately 1.3 million immigrants; 36 percent came from Bulgaria, 30 percent from Greece, 22.1 percent from Yugoslavia, and 8.9 percent from Romania. These Balkan immigrants, as well as smaller numbers of Turkic immigrants from Cyprus and the Soviet Union, were granted full citizenship upon their arrival in Turkey. The immigrants were settled primarily in the Marmara and Aegean regions (78 percent) and in central Anatolia (11.7 percent).

The most recent immigration influx was that of Bulgarian Turks and Bosnian Muslims. In 1989 an estimated 320,000 Bulgarian Turks fled to Turkey to escape a campaign of forced assimilation. Following the collapse of Bulgaria's communist government that same year, the number of Bulgarian Turks seeking refuge in Turkey declined to under 1,000 per month. In fact, the number of Bulgarian Turks who voluntarily repatriated--125,000--exceeded new arrivals. By March 1994, a total of 245,000 Bulgarian Turks had been granted Turkish citizenship. However, Turkey no longer regards Bulgarian Turks as refugees. Beginning in 1994, new entrants to Turkey have been detained and deported. As of December 31, 1994, an estimated 20,000 Bosnians were living in Turkey, mostly in the Istanbul area. About 2,600 were living in camps; the rest were dispersed in private residences.

In 1994 the government claimed that as many as 2 million Iranians were living in Turkey, a figure that most international organizations consider to be grossly exaggerated. Turkey is one of the few countries that Iranians may enter without first obtaining a visa; authorities believe that the relative ease of travel from Iran to Turkey encourages many Iranians to visit Turkey as tourists, or to use Turkey as a way station to obtain visas for the countries of Europe and North America. Consequently, as many as 2 million Iranians actually may transit Turkey--including multiple reentries for many individuals--in a given year. Specialized agencies of the European Union and the United Nations that deal with issues of migrants and refugees believe a more realistic figure of the number of Iranians who live in Turkey, and do not have a residence in Iran or elsewhere, is closer to 50,000.

In the 1960s, working-age Turks, primarily men, began migrating to Western Europe to find employment as guest workers. Many of these Turkish workers eventually brought their families to Europe. An estimated 2 million Turkish workers and their dependents resided in Western Europe in the early 1980s, before the onset of an economic recession that led to severe job losses. The Federal Republic of Germany (West Germany) initiated the program of accepting Turkish guest workers. In the 1990s, however, Germany adopted a policy of economic incentives to encourage the voluntary repatriation of Turkish workers. At the end of 1994, an estimated 1.1 million Turks continued to reside in Western Europe as semipermanent aliens. About two-thirds of these Turkish migrants lived in Germany, and another 10 percent in France. Other European countries with sizable Turkish communities included Austria, Belgium, the Netherlands, Sweden, and Switzerland. In addition, at least 150,000 Turks were working in Saudi Arabia and other Arab oil-exporting countries of the Persian Gulf.