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While AKP-led government has achieved economic growth and stability, the party has notoutperformed past governments or the...
GDP and GDP per capita have consistently increased between 2002-2011 – under AKPgovernanceProgression of Turkish Economy M...
Foreign Direct Investment has increased and inflation has stabilized at single-digit figuresunder AKP governanceProgressio...
• Inflation had reduced from 106% in 1994 to 45% in2002 – there was a downward trend in inflation priorto AKP governance. ...
While past Turkish governments have been successful in increasing the ranking of Turkey interms of GDP, AKP-led government...
While AKP-led government achieved higher growth, the same trend is seen across thedeveloping world – AKP-led government mi...
While AKP reduced inflation to a single digit, inflation had been in a downward trend prior toAKP and inflation stabilizat...
Turkish economy has been the 4th fastest growing economy among the 10 countries selected –growth is lower than developing ...
Turkish GDP per capita growth between 2002-2011 ranks 5th among the 10 countries selectedSource: World Bank3 – GLOBAL BENC...
While IMF credit has decreased since 2002 by USD 18bn, total external debt increased by USD177bn – external debt stock inc...
World Economic Forum (WEF) Global Competitiveness Report has categorized countries into 5groups – these groups represent v...
World Economic Forum (WEF) Global Competitiveness Report has categorized countries into 5groups – these groups represent v...
The first four groups contain all of the developing countries – countries from each group havebeen selected for this bench...
Demystifying the Turkish Economic Success under AKP Governance
Demystifying the Turkish Economic Success under AKP Governance
Demystifying the Turkish Economic Success under AKP Governance
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Demystifying the Turkish Economic Success under AKP Governance

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Turkey has achieved economic growth and stability under AKP governance - in terms of GDP, GDP per capita, Inflation and Foreign Direct Investment. Having said that it is important to put this growth and success into perspective. AKP-led government has not outperformed past governments or the developing world in terms of key indicators

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Demystifying the Turkish Economic Success under AKP Governance

  1. 1. While AKP-led government has achieved economic growth and stability, the party has notoutperformed past governments or the developing world in terms of key indicatorsKey Messages1. AKP-led government has achieved economic growth and stability2.3.AKP-led government has not outperformed past Turkish governments in terms of keyindicatorsAKP-led government has performed on-par with the developing world in terms of keyindicators, however has not outperformed it. Stable economic growth can beobserved across the world - especially at developing countries - since 2002Turkish economy’s external debt has increased from USD 130bn in 2002 to USD307bn in 2011 under AKP governance – even though IMF debt has decreased4.
  2. 2. GDP and GDP per capita have consistently increased between 2002-2011 – under AKPgovernanceProgression of Turkish Economy Main IndicatorsSource: World BankGDP, constant 2000 USD exchange rate [USD bn]1)5.25%2011422.82010389.72009357.02008375.12007372.62006356.02005333.02004307.22003280.92002266.9GDP per capita, constant 2000 USD exchange rate [USD bn]1)4,0783.87%20115,74120105,35620094,96920085,28820075,32420065,15520054,88720044,56920034,23520021 – ECONOMIC GROWTH AND STABILITY1) AKP won the elections at the end of 2002 and have been leading the government since
  3. 3. Foreign Direct Investment has increased and inflation has stabilized at single-digit figuresunder AKP governanceProgression of Turkish Economy Main IndicatorsSource: World BankForeign Direct Investment inflow, current USD [USD bn] 1)34.94%201116.020109.020098.4200819.5200722.0200620.2200510.020042.820031.720021.1Inflation, consumer prices [annual %] 1)1 – ECONOMIC GROWTH AND STABILITY20116.520108.620096.3200810.420078.8200610.5200510.1200410.6200325.3200245.01) AKP won the elections at the end of 2002 and have been leading the government since
  4. 4. • Inflation had reduced from 106% in 1994 to 45% in2002 – there was a downward trend in inflation priorto AKP governance. There was also a global trendtowards a stabilization of inflation across emergingcountries in the 2000s• Turkish economy grew at 5.25% per annumbetween 2002-2011, growth was at 4.6% p.a.between 1960-2000While AKP has achieved economic growth and stability, the party took advantage of favorableglobal trends and a recovered economy following the 2001 crisisKey Facts and Implications for AKP-led GovernmentSource: World Bank• Turkish economy was the 22nd biggest economyin 1981, 21st in 1991, 17th in 2002 and again 17thin 2011• While past governments have beensuccessful in increasing Turkey’s GDP sizeranking from 22nd to 17th, under AKP’sgovernance, ranking has stayed the sameKEY FACTS IMPLICATIONS FOR AKP-LED GOVERNMENTABC2 – BENCHMARKING WITH PAST TURKISH GOVERNMENTS• The plan to stabilize inflation was developedunder Kemal Dervis’ leadership and AKPfound a recovered economy «in their lap» atthe beginning of their term. A global trendtowards stabilized inflation also helped AKP• Current government has achieved highergrowth rate compared to previous times.However, while previous governments since1960 have performed better than thedeveloping world in terms of growth, AKPhas not been able to do so
  5. 5. While past Turkish governments have been successful in increasing the ranking of Turkey interms of GDP, AKP-led government has not been able to do soRanking of countries in order of GDP (based on constant 2000 USD exchange rate)Source: World Bank2A – BENCHMARKING WITH PAST TURKISH GOVERNMENTS1981 1991 2002 20111. United States2. Japan3. Germany4. France5. United Kingdom……..16. India17. Sweden21. Austria22. Turkey……..1. United States2. Japan3. Germany4. United Kingdom5. France……..16. India17. Switzerland21. Turkey……..1. United States2. Japan3. Germany4. United Kingdom5. China……..16. Russia17. Turkey1. United States2. Japan3. China4. Germany5. United Kingdom……..16. Russia17. Turkey
  6. 6. While AKP-led government achieved higher growth, the same trend is seen across thedeveloping world – AKP-led government might have taken advantage of a global trendSource: World Bank2B – BENCHMARKING WITH PAST TURKISH GOVERNMENTSAnnual GDP growth across various timeperiods in Turkey and the Developing World [%]1) Developing world includes emerging countries in East Africa & Pacific, Europe & Central Asia, Latin America & Caribbean, Middle East & Africa, South Asia, Sub-SaharanAfrica – as per World Bank categorizationComments• While Turkish economic growth has outperformed the developing world in all periods until 2002, it has stayed below developing world growthunder AKP governance• While the world economy has grown at 2.69% per annum between 2002-2011, developing world has grown at a much higher rate – 6.61%.This is due to a trend towards increased productivity, consumption, foreign direct investment in the developing world in the 2000s – which isfueled by globalization. As the room for consumption surge has reached close to saturation in the developed world, developed countries,such as US and Europe, have focused their attention towards the developing countries• Globalization and growth in the developing world partially explain the higher growth rate of Turkish economy (compared to pastgovernments) nder AKP governanceAnnual GDP growth across various timeperiods in Turkey and the Developing World2)1960-2000 1970-2000 1981-20004.63.7 4.33.64.43.31991-2000 1960-2011 2002-20114.0 4.55.33.9 4.26.6Turkey Developing WorldAKP Governance1)1)
  7. 7. While AKP reduced inflation to a single digit, inflation had been in a downward trend prior toAKP and inflation stabilization occurred across many countries globallySource: World Bank2C – BENCHMARKING WITH PAST TURKISH GOVERNMENTSTurkey Inflation, consumer prices [annual %]54.4200054.9199964.9199884.6199785.7199580.3199688.11994106.32001 200245.06.52011Beginning of AKP GovernanceInflation Rate at Other Countries [annual %]• Turkey’s inflation rate has decreased from 106% in 1994to 45% in 2002 due to various fiscal and monetarypolicies. The decrease in inflation rate has continuedduring AKP leadership and inflation has been maintainedat single digit figures• Many countries around the world had inflation ratesabove 10% in 1994 – around 70 countries. The numberof countries with inflation rates above 10% decreased toaround 20 in 2011. There has been a global efforttowards decreasing inflation rates and maintainingeconomic stability during 2000sAnalysis of Turkish Inflation Rate prior to AKP and Globally1994 2011Brazil 2076% 6.6%Bulgaria 96% 4.2%Uruguay 45% 8.1%Romania 137% 5.8%Algeria 29% 4.5%Comments
  8. 8. Turkish economy has been the 4th fastest growing economy among the 10 countries selected –growth is lower than developing world average GDP growthSource: World Bank3 – GLOBAL BENCHMARKINGGDP Annual Growth at comparable countries, 2002-2011 [%]3.9Thailand4.0Russia4.7Egypt4.9Turkey5.3India5.6Indonesia8.1China10.7World DevelopingWorldBrazil SouthAfrica3.52.4Mexico2.76.63,548GDP, 2011[USD bn]1,047 293 423 163 434 188 945 194 722Comments• Asian economies (China, India, Indonesia) have performed better than the Turkish economy in terms of GDP growth. While Turkey’s growth,between 2002-2011, is above the world GDP growth (as expected), it has not outperformed the developing world GDP growth• Chinese and Indian economies make up a vast amount of the developing world GDP. Their high GDP growth rates have an impact on thedeveloping world average GDP growthTurkey GDP Growth Benchmarking2)2) AKP won the elections at the end of 2002 and have been leading the government since42,568 11,2071)1) Methodology to select comparable countries for benchmarking are explained in section 2 of the report
  9. 9. Turkish GDP per capita growth between 2002-2011 ranks 5th among the 10 countries selectedSource: World Bank3 – GLOBAL BENCHMARKINGGDP Per Capita Growth, based on constant 2000 USD exchange rate, 2002-2011 [%]2.8Egypt3.1Thailand3.1Turkey3.9Indonesia4.5India4.9Russia6.6China10.2Brazil SouthAfrica2.31.1Mexico1106 /2640GDP perCapita,(2002/2011)[USD]Comments• Turkey’s GDP per capita increased by 3.9% per annum between 2002 and 2011. It is on par with other developing countries. BRIC (Brazil-Russia-India-China) have generally performed higher than Turkey while Turkey has perfrormed better than South Africa, Mexico and Thailand• Turkey GDP per capita was the 2nd highest prior to AKP, in 2002, and was still the 2nd highest in 2011Turkey GDP per Capita Annual Growth Benchmarking1)1) AKP won the elections at the end of 2002 and have been leading the government since475 /8431968 /3033816 /12074078 /57412043 /26991508 /19773740 /48033108 /38255703 /6288
  10. 10. While IMF credit has decreased since 2002 by USD 18bn, total external debt increased by USD177bn – external debt stock includes debt from IMFSource: World Bank, Desktop Research4 – DEBT ANALYSIS10.06%20113072001072010300191109200927817210620082901891012007258161972006209121882005171858620041586494200314349942002130438620114.520107.320099.620088.720077.3200610.9200514.8200421.7200324.3200222.2External Debt Stock, Current USD Exchange Rate [USD bn]IMF Credit, Current USD Exchange Rate [USD bn]Comments• Kemal Dervis was brought to steer theeconomy in his capacity as the deputyprime minister when the 2001 economiccrisis erupted. The IMF opened thecredit taps to overcome the crisis.Following the formulation of a soundroadmap for economic recovery, AKPwon the elections in Nov. 3, 2002. Theparty found a recovered economy in itslap• Turkey’s debt to the IMF is a very smallportion of the total debt. While the AKP-led government has been successful indecreasing the amount of debt owed toIMF, unfortunately, this is notrepresentative of the trend seen in totalexternal debt• Turkey’s external debt increased byUSD 177bn since 2002. Both public andprivate debt have contributed to thisincrease. Government was able to payportion of the IMF debt through theincome from privatizationsTurkey’s External Debt Stock and IMF Credit ProgressionPrivate debtPublic debt
  11. 11. World Economic Forum (WEF) Global Competitiveness Report has categorized countries into 5groups – these groups represent various stages of development of a country (1/2)Source: World Economic Forum, World BankStages of Development DescriptionSample List ofcountriesStage 1: Factor Driven Economies in the first stage are mainly factor-drivenand compete based on their factor endowments –primarily low-skilled labor and natural resources.Companies compete on the basis of price and sellbasic products or commodities, with their lowproductivity reflected in low wages.India, Kenya, Pakistan,Ghana, Moldova,Tajikistan, Vietnam…Transition from Stage 1 toStage 2Economies in transition from Stage 1 to Stage 2 Egypt, Saudi Arabia, Iran,Philippines, Venezuela…Stage 2: Efficiency Driven As a country becomes more competitive, productivitywill increase and wages will rise with advancingdevelopment. Countries will then move into theefficiency-driven stage of development, when theymust begin to develop more efficient productionprocesses and increase product quality becausewages have risen and they cannot increase pricesChina, Indonesia, SouthAfrica, Thailand,Colombia, Peru, Romania,Ukraine…Stages of Development
  12. 12. World Economic Forum (WEF) Global Competitiveness Report has categorized countries into 5groups – these groups represent various stages of development of a country (2/2)Source: World Economic Forum, World BankStages of Development DescriptionSample List ofcountriesTransition from Stage 2 toStage 3Economies in transition from Stage 2 to Stage 3 Brazil, Mexico, Russia,Turkey, Argentina, Poland,Chile, MalaysiaStage 3: Innovation Driven Finally, as countries move into the innovation-drivenstage, wages will have risen by so much that they areable to sustain those higher wages and theassociated standard of living only if their businessesare able to compete with new and/or uniqueproducts, services, models, and processesUnited States, Japan,France, United Kingdom,Israel, Germany…Stages of Development
  13. 13. The first four groups contain all of the developing countries – countries from each group havebeen selected for this benchmarking - based on size of economy in 2011Source: World Economic Forum, World BankStage 1 Stage 1 to 2 Stage 2 Stage 2 to 31. Brazil2. Mexico3. Russia4. Turkey5. Argentina6. Poland1. China2. Indonesia3. South Africa4. Thailand5. Colombia6. Peru2. Egypt1. Saudi Arabia1)3. Iran4. Venezuela5. Philippines6. Algeria1. India2. Pakistan3. Bangladesh4. Nigeria5. Vietnam6. KenyaCountries within each stage of development (category) has been ranked in terms of GDP. As «Stage 2»countries are similar to «Stage 2 and 3», 4 countries from each category have been selected for benchmarkingpurposes. One country each from «Stage 1» and «Stage 1 to 2» categories have been selected forbenchmarking1) Saudi Arabia is a unique country in terms of governance and economy, therefore has not been included in the list of comparable countriesComparable Country Selection

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