Download Comparative Politics of Developing Countries

The Economic Performance of
Turkey
Ahmed ALABBADI
Mehmet SAGLAM
MSPE
Department of Economics
University of Illinois at Urbana-Champaign
1
Growth
100
8000
90
7000
80
6000
Consumption share
of RGDPL (%)
50
4000
Investment share of
RGDPL(%)
40
3000
30
%
USD
60
5000
70
Real GDP per
capita($)
2000
20
1000
10
0
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Year
2
1969.01
1970.01
1971.01
1972.01
1973.01
1974.01
1975.01
1976.01
1977.01
1978.01
1979.01
1980.01
1981.01
1982.01
1983.01
1984.01
1985.01
1986.01
1987.01
1988.01
1989.01
1990.01
1991.01
1992.01
1993.01
1994.01
1995.01
1996.01
1997.01
1998.01
1999.01
2000.01
2001.01
2002.01
2003.01
2004.01
Inflation
145
Annual & Monthly Consumer Price Inflation (%, Feb.1969-Sep.2004)
135
125
115
25
15
annual
105
95
85
75
65
55
45
35
monthly
5
-5
 Turkey suffered from high and persistent
inflation since more than three decades
3
Inflation:
Relative Inflation Rates: Turkey's CPI Inflation vs. Foreign CPI Inflation
65
60
55
50
Turkey /
Industrial
Countries
45
40
Turkey / World
Average
35
30
Turkey /
Middle East
25
20
15
Turkey /
Developing
Countries
10
5
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
0
4
Trade Policy & Balance of Payments
1.25
1.00
0.75
0.50
0.25
1969-1980: import-substituion era
1979-1980: real-sector and balance-of-payments crises
1980-1984: current-account liberalization and exports promotion
May 1981: abondonment of fixed exchange rates
1989: capital-account liberalization
1994: major currency crisis
2000-2001: triple crises (banking, currency & real-sector)
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
0.00
Bilateral (TL/USD) Real Exchange Rates (1995=1.0)
Official Exchange Rates / Black-Market Exchange Rates
Exports-to-Imports Ratio in Manufacturing
Import Penetration Ratio
Tax-Rebate Ratio for Exports
Taxes on Foreign-Trade to Imports Ratio
Customs-Duties to Imports Ratio
5
What happened in the past?
6
7
Public Sector Borrowing Requirement
and Consolidated Budget Balance
Public Sector Borrowing Requirement (PSBR) and Consolidated Budget Balance (CBB)
12
9
6
3
0
-3
-6
-9
-12
-15

Non-interest PSBR to GDP
PSBR to GDP
Non-interest CB to GDP
CB to GDP
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
-18
The PSBR is a better indicator of the public sector
in Turkey
8
Structure of Expenditures

The structural constraints over the Turkish fiscal policy:
Interest expenditures as a ratio of tax revenues reached
103.3% by 2001
9
Financial Sector
3.5
Aug. '82
Dec. '82
3.0
2.5
1.5
Aug. '97
Feb. '87
1.0
Oct. '93
Nov. '90
0.5
Jun. '79
Nov. '83
May '80
-1.5
Jul. '99
Oct. '94
Feb. '02
High Fragility

BSF3
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
Jan-88
Jan-87
Jan-86
Jan-85
Jan-84
Jan-83
Jan-82
Jan-81
Jan-80
Jan-79
-2.0
Jan-04
Sep. '88
Jan-03
-1.0
Apr. '94
Jan-02
Jan. '86
Jan-01
-0.5
Nov. '91
0.0
Oct. '00
Feb. '01
2.0
BSF2
Turkish banking sector experienced difficulties many
times within the last 25 years, as a result of their own
excessive risk-taking behavior in the past.
10
Financial Sector:
The Turkish Banking System
Composition of Banking Sector Balance Sheet
(percent)
11
The Turkish Banking System

The most important characteristic of capital markets in
Turkey is the predominance of the government
securities.
12
Changing Domestic Savings and
Investment
 Loose fiscal policy
 Rising budget deficit,
13
The Economic Performance of Turkey
Thank you...
14