Prof. Dr. Mustafa Acar
Kirikkale University
Department of Economics
01.11.2010 EFW, Cairo 1
plan
 Facts about Turkey
 Importance of Turkey for the MENA region
 Recent political and economic reforms in Turkey
 M...
01.11.2010 EFW, Cairo 3
01.11.2010 EFW, Cairo 4
Facts about Turkey
 Population: 72 million (98% Muslim)
 Location: Anatolia; bridge between Asia and Europe
 Political ...
GDP (PPP)
 $960 billion (2010)
 $874.5 billion (2009 est.)
 $926.4 billion (2008 est.)
 Comparison to the world: 16
 ...
GDP p.c.
 $13,300 (2010 est.)
 $11,400 (2009 est.)
 $12,200 (2008 est.)
01.11.2010 EFW, Cairo 7
breakdown of GDP (2009)
 agriculture: 9.3%
 industry: 25.6%
 services: 65.1%
01.11.2010 EFW, Cairo 8
Public debts
 46.3% of GDP (2009 est.)
 40% of GDP (2008 est.)
 Maastricht criteria: 60%
01.11.2010 EFW, Cairo 9
Twin deficits (2009)
 CAB: -2% of GDP
 Budget Deficit: -5.5% of GDP
 -1.0% (2008)
01.11.2010 EFW, Cairo 10
Importance of Turkey for the
MENA
 Strong historical, cultural ties
 Ottoman heritage: 1513-1922
 Family ties in neighb...
What’s happening in Turkey?
 Dramatic changes:
 Political
 Economic
 Legal reforms
 Making peace with:
 History
 Ne...
Factors behind transformation
01.11.2010 EFW, Cairo 13
External factors
 Globalization
 End of Cold War
 Changing expectations
01.11.2010 EFW, Cairo 14
Internal factors
 Özal reforms (1980s)
 Lessons from experience of the past crises (1994, 99,
2000-01)
 Emergence of a ...
Recent reforms
 Political reforms
 Legal reforms
 Economic reforms
01.11.2010 EFW, Cairo 16
Political and legal reforms
 Constitutional reform (Sep. 12, 2010)
 Legal reforms: reducing the role of military in poli...
Economic reforms
 Fiscal discipline: BD: 3%,
 IMF condition: 6.5% primary surplus
 Autonomous Central Bank: inflation-t...
Success story
 Improvements in many macro indicators
 Growth accelerated
 GDP pc increased
 Inflation fell down
 Budg...
Accelerated growth
 (1993-2001): 3%
 (2002-2008): 6.1%
 2009: -4.7%
 2010: 10.3%
 3rd fastest growing economy in the ...
Growth performance
01.11.2010 EFW, Cairo 21
0
1
2
3
4
5
6
7
1993-2001 2002-2008
growth (annual average, %)
Income pc has gone up
 pc GDP
 2001: $2,160
 2010: $13,300
01.11.2010 EFW, Cairo 22
GDP pc
01.11.2010 EFW, Cairo 23
0
2000
4000
6000
8000
10000
12000
14000
2001 2010
GDP pc ($)
Budget deficit narrowed
 2001: 16% of GDP
 2008: 1%
 2010: 3%
01.11.2010 EFW, Cairo 24
Budget deficits
01.11.2010 EFW, Cairo 25
0
2
4
6
8
10
12
14
16
18
2002 2010
budget deficit (% of GDP)
Public debts under control
 2001: 80% of GDP
 2009: 46.3%
01.11.2010 EFW, Cairo 26
Public debts
01.11.2010 EFW, Cairo 27
0
10
20
30
40
50
60
70
80
90
2002 2010
public debts (% of GDP)
Inflation fell down
 single digit inflation after 3 decades!
 CPI
 (2002) 45,0%
 (2010) 9.2%
01.11.2010 EFW, Cairo 28
Price stability
01.11.2010 EFW, Cairo 29
0
5
10
15
20
25
30
35
40
45
50
2002 2010
inflation (CPI)
Exports increased
 (2002): 36 (billion $)
 (2008): 132
 (2009): 102
 (2010): 115
01.11.2010 EFW, Cairo 30
Exports
01.11.2010 EFW, Cairo 31
0
20
40
60
80
100
120
140
2002 2008
exports (b $)
Other macro indicators
 Interest rates (%): (2002) 44, (2010) 6.5
 FX reserves: 2002: $26, 2010: $75 b
 Construction fi...
Areas of economic freedom
 Size of government
 Legal structure and property rigths
 Sound money
 Free trade
 Regulati...
Overall efw score: Turkey
01.11.2010 EFW, Cairo 34
0
1
2
3
4
5
6
7
8
1980 1985 1990 1995 2000 2005 2007 2008
EFW trends (Turkey)
01.11.2010 EFW, Cairo 35
0
1
2
3
4
5
6
7
8
9
1980 1985 1990 1995 2000 2005 2007 2008
size og govt
prop...
Areas of improvement
01.11.2010 EFW, Cairo 36
0
1
2
3
4
5
6
7
8
9
size og govt prop.rights sound money free trade regulati...
Conclusion
 Turkey is an important country and political actor in
the region
 Going through a tremendous political, lega...
Thank you 
01.11.2010 EFW, Cairo 38
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Turkey on the road to economic and political freedom

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Turkey on the road to economic and political freedom

  1. 1. Prof. Dr. Mustafa Acar Kirikkale University Department of Economics 01.11.2010 EFW, Cairo 1
  2. 2. plan  Facts about Turkey  Importance of Turkey for the MENA region  Recent political and economic reforms in Turkey  Macro indicators  Economic freedom performance  Conclusion 01.11.2010 EFW, Cairo 2
  3. 3. 01.11.2010 EFW, Cairo 3
  4. 4. 01.11.2010 EFW, Cairo 4
  5. 5. Facts about Turkey  Population: 72 million (98% Muslim)  Location: Anatolia; bridge between Asia and Europe  Political system: “parliamentary democarcy” vs. “bureaucratic guardianship regime”!  Economic system: transition from centrally planned to free market economy  International relations: UN, NATO, OECD, UN security council; EU candidate 01.11.2010 EFW, Cairo 5
  6. 6. GDP (PPP)  $960 billion (2010)  $874.5 billion (2009 est.)  $926.4 billion (2008 est.)  Comparison to the world: 16  Comparison to Europe: 6  Target: among the biggest 10 by 2023  Projection: 4th by 2050! 01.11.2010 EFW, Cairo 6
  7. 7. GDP p.c.  $13,300 (2010 est.)  $11,400 (2009 est.)  $12,200 (2008 est.) 01.11.2010 EFW, Cairo 7
  8. 8. breakdown of GDP (2009)  agriculture: 9.3%  industry: 25.6%  services: 65.1% 01.11.2010 EFW, Cairo 8
  9. 9. Public debts  46.3% of GDP (2009 est.)  40% of GDP (2008 est.)  Maastricht criteria: 60% 01.11.2010 EFW, Cairo 9
  10. 10. Twin deficits (2009)  CAB: -2% of GDP  Budget Deficit: -5.5% of GDP  -1.0% (2008) 01.11.2010 EFW, Cairo 10
  11. 11. Importance of Turkey for the MENA  Strong historical, cultural ties  Ottoman heritage: 1513-1922  Family ties in neighboring countries  “Muslim democracy”  Recent efforts to strengthen ties: visa agreements, investments, trade  Only country in the region who have diplomatic relations with Iran, Syria, Israel, Palestine..  Pipelines: Kirkuk-Yumurtalık, Baku-Tiblisi-Ceyhan, Nabucco.. 01.11.2010 EFW, Cairo 11
  12. 12. What’s happening in Turkey?  Dramatic changes:  Political  Economic  Legal reforms  Making peace with:  History  Neighbors  Own people (Kurds, Alevis, Sunnis, non-Muslims)  Healing from “historical lobotomy” (G. Fuller) 01.11.2010 EFW, Cairo 12
  13. 13. Factors behind transformation 01.11.2010 EFW, Cairo 13
  14. 14. External factors  Globalization  End of Cold War  Changing expectations 01.11.2010 EFW, Cairo 14
  15. 15. Internal factors  Özal reforms (1980s)  Lessons from experience of the past crises (1994, 99, 2000-01)  Emergence of a new middle class (conservative- religious bourgeoisie)  “Anatolian Tigers” 01.11.2010 EFW, Cairo 15
  16. 16. Recent reforms  Political reforms  Legal reforms  Economic reforms 01.11.2010 EFW, Cairo 16
  17. 17. Political and legal reforms  Constitutional reform (Sep. 12, 2010)  Legal reforms: reducing the role of military in political affairs  Independent and impartial judiciary  End bureaucratic guardianship regime  New foreign policy perspective: Zero-problem with neighbors  “Democratic opening” process: peaceful solution to Kurdish problem 01.11.2010 EFW, Cairo 17
  18. 18. Economic reforms  Fiscal discipline: BD: 3%,  IMF condition: 6.5% primary surplus  Autonomous Central Bank: inflation-targeting  New currency: removing 6 zeros from TL  Privatizations: $40 b  “fiscal rule”: on the way…  Promoting investments, deregulations..  Institutional and legal reforms for EU adjustment (negotiatons) 01.11.2010 EFW, Cairo 18
  19. 19. Success story  Improvements in many macro indicators  Growth accelerated  GDP pc increased  Inflation fell down  Budget deficits narrowed  Public debts shrank  Interest rates fell  Exports increaed 01.11.2010 EFW, Cairo 19
  20. 20. Accelerated growth  (1993-2001): 3%  (2002-2008): 6.1%  2009: -4.7%  2010: 10.3%  3rd fastest growing economy in the world 01.11.2010 EFW, Cairo 20
  21. 21. Growth performance 01.11.2010 EFW, Cairo 21 0 1 2 3 4 5 6 7 1993-2001 2002-2008 growth (annual average, %)
  22. 22. Income pc has gone up  pc GDP  2001: $2,160  2010: $13,300 01.11.2010 EFW, Cairo 22
  23. 23. GDP pc 01.11.2010 EFW, Cairo 23 0 2000 4000 6000 8000 10000 12000 14000 2001 2010 GDP pc ($)
  24. 24. Budget deficit narrowed  2001: 16% of GDP  2008: 1%  2010: 3% 01.11.2010 EFW, Cairo 24
  25. 25. Budget deficits 01.11.2010 EFW, Cairo 25 0 2 4 6 8 10 12 14 16 18 2002 2010 budget deficit (% of GDP)
  26. 26. Public debts under control  2001: 80% of GDP  2009: 46.3% 01.11.2010 EFW, Cairo 26
  27. 27. Public debts 01.11.2010 EFW, Cairo 27 0 10 20 30 40 50 60 70 80 90 2002 2010 public debts (% of GDP)
  28. 28. Inflation fell down  single digit inflation after 3 decades!  CPI  (2002) 45,0%  (2010) 9.2% 01.11.2010 EFW, Cairo 28
  29. 29. Price stability 01.11.2010 EFW, Cairo 29 0 5 10 15 20 25 30 35 40 45 50 2002 2010 inflation (CPI)
  30. 30. Exports increased  (2002): 36 (billion $)  (2008): 132  (2009): 102  (2010): 115 01.11.2010 EFW, Cairo 30
  31. 31. Exports 01.11.2010 EFW, Cairo 31 0 20 40 60 80 100 120 140 2002 2008 exports (b $)
  32. 32. Other macro indicators  Interest rates (%): (2002) 44, (2010) 6.5  FX reserves: 2002: $26, 2010: $75 b  Construction firms (outside): (1972-2002): $1.5, 2009: $23.6 b  Stock exchange (index): (2009): 27,000; (2010): 71,000  FDIs: long term average: below $1 b, 2007: $22 b (5th among developing countries)  Unemployment (% ): (2002) 10.3, (2010) 10.6 01.11.2010 EFW, Cairo 32
  33. 33. Areas of economic freedom  Size of government  Legal structure and property rigths  Sound money  Free trade  Regulation 01.11.2010 EFW, Cairo 33
  34. 34. Overall efw score: Turkey 01.11.2010 EFW, Cairo 34 0 1 2 3 4 5 6 7 8 1980 1985 1990 1995 2000 2005 2007 2008
  35. 35. EFW trends (Turkey) 01.11.2010 EFW, Cairo 35 0 1 2 3 4 5 6 7 8 9 1980 1985 1990 1995 2000 2005 2007 2008 size og govt prop.rights sound money free trade regulation
  36. 36. Areas of improvement 01.11.2010 EFW, Cairo 36 0 1 2 3 4 5 6 7 8 9 size og govt prop.rights sound money free trade regulation 2000 2008
  37. 37. Conclusion  Turkey is an important country and political actor in the region  Going through a tremendous political, legal and economic transformation process  Have big targets: EU membership, 10th biggest economy in the world, peace and stability..  Measurable consequences of the reforms  There is still a long way to go 01.11.2010 EFW, Cairo 37
  38. 38. Thank you  01.11.2010 EFW, Cairo 38

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