Economic development of Turkey from 1914 to 2013

Economic development of Turkey from 1914 to 2013 BY psy1001 Economic Development of Turkey From 1914 to 2013 The movement of Turkish economy in twentieth century was influenced by large number of historical, political and economic events. Externally, Turkish economy was influenced by large events such as World War 1. , Economic depression, and World war II. Internally, Turkish economy was influenced by changes in economical policy(Altug et al. , 2006). The changes in economical policy can be divided in the four major period. On the period of liberal economic regime from 1923 to 1929.

The period of state accumulation which lasted from 1929 to 1945. The period of state guided by industrialization which lasted from 1950 to 1980. The period of liberal trade of goods, services and financial transaction which started in 1980. (Prof. Dr. M?kerrem et al. , 2009). The Turkey as a modern state aroused from the collapse of Ottoman Empire in 1923. World War I and its impact has a very harsh effects on the Turkish economy. Just in the period from 1914 to 1924 population of the areas comprising present day Turkey declined by 18 percent.

Neverthless, during the liberalization of arket Turkey had slow growth rate from 1920 to 1929.

With that pace Turkey reached a pre-war level of GDP Just in 1929. (Altug et al. , 2006). In 1929 Economic depression cast a shadow on classical laissez-faire economy which asserted that economy will automatically achieve full employment without any type of state intervention. (Prof. Dr. M?kerrem et al. , 2009, p. 5-6). As a response to that event almost all high official of that time such as president Atat?rk, prime minister in?¶n?, and secretary general Recep Peker, decided to accepted Etatism.

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Etatism means that rom then onward Turkishm goverment had decided to have more control over economic and social politicy.

Concerning that the Turkey was relativly new republic turkish government was sensitive toward any form of reactionism or religious extremism. In other words to secure stability, Turkish government wanted to find a middle way between socialism and capitalism. (Prof. Dr. M?kerrem et al. , 2009, p. 7). During the pure liberal faze from 1923 to 1930 the yearly average growth rate was 9. 12%. In the period of great depression 1930-35 Turkey still succeded to have small growth rate of 2. 4%. In the period of Etatism the rate was 7. 08% (Prof. Dr. M?kerrem et al. , 2009, p. 9-10).

Etatist regime bring first industrialization phase in the hitherto predominately agricultural country. This enble Turkey to have steady growth rate until the beggining of the World War II. Even the Turkey officialy engaged in WWII just in the last two months and did not directly suffer from war destruction, it still have significantly higher expenditures for army. Also, in the period of WWII foreging trade drasticaly decreased. Both elements in the period of 1939 to 1945 produced an ecover. The average yearly growth rate was 11% (Prof. Dr. M?kerrem et al. , 2009, p. 14).

In 1950 the newly elected Democrat Party started agriculturale reforms. This reforms were argubaly the most important in the course of Republican History. Reforms included increase in arable lands together with the mechanization of agriculture(Altug et al. , 2006). The succes of agricultural reforms are evident from the statistics which show rapid increase in agricultural output (Altug et al. , 2006, p. 6) (Turkish Statistical Institute). Even the new regime which look at private investment nd production as a basis of development, economy had still preserved intensive government inteverntions both at macro and micro levels.

Also, the policy included intensive protection in foreign trade. This policy have a negative effects on private enterptise, and investment which were still inadequate to achieve satisfactory growth rate (Prof. Dr. M?kerrem et al. , 2009, p. 20). From 1950 to 1959 nominal GDP increased for 66. 11%. On the other hand, inflation in that period increased for 94. 1%, and population increased for 26. 1%. All this produced decline in real GDP per capita. Even reform proved to be successful in the first four years with an average yearly per capita GNP growth rate of 8. 9% and inflation of only 2. %, contrary, the period from 1955-1959 was catastrophic. To precise, the yearly average per capita GNP growth rate was 1. 2% and yearly average price rise to 13. 9%. (Prof. Dr. M?kerrem et al. , 2009, p. 20). In 1960 due to the harsh economic situation on May 27th, had the first coup d’?©tat, which led to change in the government and constitution. Also the hard economical situation forced Turkey to find new credit through the IMF. To get loan from IMF Turkey had to accept IMF mesaures and guidlines. The general mesaures were devaluation of Turkish lira and austerity mesaures.

This mesaures were designet to decrease domestic demand for foriegn goods and consequently reduce turkish deficit. Nevertheless, government spending were from decade to decade higher, and till 1980 external debt climbed to US$16. 2 billion. In 1980, Turkish economy experienced a large liberalization reform. ?–zal’s reform program included a reduced state role in the economy, a realistic exchange rate and realistic monetary olicies, cutbacks on subsidies and price controls, and encouragement of exports and foreign direct investment (Monabay).

With thiese policies Ozal wanted to change Turkish economy from import-substituting to export led-growth economy. From 1980 to 1990 GDP per capita increased from USD$1 567 to USD$2 791(world sank). From 1980 to 1984 economy have a downturn, and 1984 GDP per capita was Just USD$1246. From 1985 to 1991 average grow was 9. 9%. The highest growth occured from 1989 USD$2019to 1990 USD$2791. The 1990 grow rate was 27. 6%. From 1991 to 1993 GDP per capita increased. In 1991 GDP per capita was USD$2751, 1992 USD$2850, and in 1993 USD$3180.

In 1994 during the economic crisis GDP per capita dramaticaly decreased to USD$2268. From 1995 to 2000 GDP increased each year. Approximate growth rate for that period is 6. 6%. GDP per capita incresed from 1994 USD$2268 to 1998 USD$ 4392. GDP per capita decreased from 1999 USD$ 4392 to 2001 USD$ 3058 (World Bank). In the begining of 20th century Turkish economy achived major expansion. GDP per capita increased from 2003 USD$ 4595 to 2012 USD$10. 666 (World Bank). Average growth rate for that period is 5. 69%. As regards developed ountries Turkey is today one of the fastest growing economies.

From 2002 onward major structural reforms has integrated Turkish economy into the globalized world. BIBLIOGRAPHY Prof. Dr. M?kerrem with Asst. Prof. Dr. Aysen Gencer (2009) Turkish Economy and Politics 1923 to 2002, from http://www. beykent. edu. tr/docs/mkrrm2. pdf? phpMYAdmtn=26b1 ab37aa748d52c4747d623bec741 b Mongabay, from http://www. mongabay. com/reference/country_studies/turkey/ ECONOMY. html Sumru Altug, Alpay Filiztekin, and #vket Pamuk (October 6, 2006) Sources of Long- Term Economic Growth for Turkey, from http://dev3. epr. org/meets/wkcn/111658/ papers/altug. df Turkish Statistical Institute from http://www. turkstat. gov. tr/PreTablo. do? alt_id=1045 World Bank, from http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=6 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=5 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=4 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=3 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=2 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD? page=1 http://data. worldbank. org/indicator/NY. GDP. PCAP. CD