Download Export-Led Growth: 1980- Onwards

Export-Led Growth: 1980- Onwards
1980
1983
Outward Orientation
1989
2011
Financial Liberalization
Economy at 1970’s:
▫ High inflation
 1957-58: 20-25%
 1970’s : 75-80 %
▫ Unsustainable trade deficits
 1950’s: 300-400 million US$
 1970’s: 2500 million US$
▫ High unemployment rates
 1972: 13,3%
 1983: 16%
Economy at 1970’s:
▫ External factors:
 Increases in oil prices (OPEC)
 Economic crises in trade partners
 The collapse of the Bretton-Woods system
▫ Cyprus operation
▫ New trends in the world:
 USAReaganomics
 UK Thatcherism
Economy at 1970’s:
• Government Policies:
▫ Industrialization:




Consumption goods Etatism period
Durable consumption goodsPlanned economy
Intermediate goods
Investment goods
▫ Stabilization efforts
Structural Adjustment Program:
January 24, 1980
▫ Prepared by Turgut Özal (Undersecretary of the
Prime Minister) under the control of IMF.
▫ Prime Ministers:
 1980-83: Bülent Ulusu (Military Rule)
 1983-87: Turgut Özal (Anavatan Party)
 1987-89: Turgut Özal (Anavatan Party)
Structural Adjustment Program:
January 24, 1980
• General Principles:
▫ Long-term economy policy
 To end economic crisis in the short-run
 Structural change in the long-run
▫ Free Market Economy
 Price Mechanism
 Decresing role of government
▫ Export-led Growth
Structural Adjustment Program:
Policies
• 1. Pricing
▫
▫
▫
▫
Goods and services market
Labor market
Money market
Foreign exchange market
1968-1972: 1st vicious circle
low income
low savings
low investments
1968-1972: 2nd vicious circle
limited
domestic
production
low imports
low exports
Structural Adjustment Program:
Policies
• 2. Outward Orientation
▫ Export promotion




Exchange rate policy
Export tax rebate system
Cash premiums
Export credits
▫ Import liberalization
Structural Adjustment Program:
Policies
• 3. Foreign Investment Expectation
• 4. Public Sector Reform
▫
▫
▫
▫
To broaden the tax base
Rationalization of public investments
To improve the functioning of the PEEs
Privatization
Main Economic Indicators (%)
GNP Growth
Employment
Growth
Savings/GNP
Manufac./
GDP
Agriculture/
GDP
1980
-1.1
1.2
16.0
21.1
22.6
1983
3.3
0.9
16.2
23.9
19.6
1985
5.1
1.6
18.9
25.1
18.8
1989
1.9
2.1
23.6
25.3
16.7
Main Economic Indicators (%)
Exports/GNP
Imports/GNP
Current acc.
/GNP
Foreign
debt/GNP
1980
6.4
13.9
-5.5
28.0
1983
15.7
19.6
-3.7
35.7
1985
20.7
23.5
-1.9
47.5
1989
23.5
24.0
0.9
52.0
Main Economic Indicators (%)
Inflation rate
Monetary
growth (M1)
Nominal
Depreciation R.
1980
103.8
57.9
142.0
1983
28.0
48.0
40.2
1985
43.9
39.7
40.9
1989
66.9
72.9
47.4
Yeldan, 2001, s.52.
Growth Rates: 1923-2010
Period
Average Growth Rate (%)
1924-1929
8,6
1930-1939
5,8
1940-1945
-6,0
1946-1953
10,2
1954-1961
4,4
1962-1979
6,5
1980-1988
4,9
1989-2002
3,3
2003-2010
4,9