This document analyzes Turkey's economic development as a case study for other Middle Eastern countries. It begins by defining economic development using the Solow growth model and critiquing its assumptions. It then examines Turkey's economic history and past policies for achieving growth. Finally, it suggests future policies for Turkey, including increased investment in human capital and looser fiscal policy, and discusses their applicability to other Middle Eastern nations. The goal is to demonstrate that fully realized development is possible in the Middle East by taking a realistic view of classical growth theories.

1. 2067
ECON
480
DEPAUW
UNIVERSITY
10/16/14
THE
PROCESS
OF
ATTAINING
ECONOMIC
DEVELOPMENT
IN
THE
MIDDLE
EAST:
A
TURKISH
CASE
STUDY
ABSTRACT
THROUGH
THE
LENS
OF
TURKEY,
THE
POTENTIAL
TO
OBTAIN
ECONOMIC
DEVELOPMENT
IN
THE
MIDDLE
EAST
WILL
BE
EVALUATED.
FIRST,
A
DEFINITION
FOR
DEVELOPMENT
WILL
BE
DETERMINED
THROUGH
THE
USE
OF
ECONOMIC
GROWTH
MODELS,
NAMELY
THE
SOLOW
GROWTH
MODEL.
NEXT,
THE
HISTORY
OF
TURKEY
WILL
SERVE
AS
A
MEANS
OF
PROVING
GROWTH
TOWARDS
DEVELOPMENT.
PAST
POLICIES
IMPLEMENTED
WITH
THE
GOAL
OF
OBTAINING
DEVELOPMENT
SUCH
AS
FINANCIAL
AND
TRADE
LIBERALIZATION
WILL
BE
EVALUATED
AND
CRITIQUED.
FINALLY,
A
NEW
PIECE
OF
DEVELOPMENTAL
THOUGHT
WILL
BE
ADDED
TO
THE
ORIGINAL
DEFINITION
AND
SUGGESTED
POLICIES
OF
INVESTMENT
IN
HUMAN
CAPITAL
AND
FISCAL
LOOSENING
WILL
BE
EVALUATED
FOR
FIT
IN
TURKEY
AS
WELL
AS
THE
MIDDLE
EAST.

2. 2
INTRODUCTION
3
SCOPE
OF
THE
PAPER
3
THE
SOLOW
GROWTH
MODEL
AND
AN
ADAPTATION
5
THE
DEVELOPMENT
OF
TURKEY
9
PREVIOUS
GROWTH
POLICIES
THAT
WERE
NOT
FULLY
REALIZED
12
SUGGESTED
FUTURE
POLICIES
FOR
TURKEY
AND
THE
MIDDLE
EAST
16
CONCLUSION
24
WORKED
CITED
28

3. 3
Introduction
Beginning
in
the
early
1990s,
Turkey
was
viewed
as
a
model
of
development
for
the
former
Soviet-­‐controlled
region
in
Asia
(Mango
1993).
The
country
was
given
this
title
because
of
their
humble
beginnings
and
yet
seemingly
rapid
ascension
into
the
world’s
elite
groups
such
as
NATO
and
the
United
Nations.
However,
Turkey
did
not
view
itself
in
the
same
positive
light.
Mango
writes,
“Talk
of
a
Turkish
model...acted
as
a
stimulant
in
the
difficulties
and
disappointments...at
a
time
when
it
was
still
well
behind
the
advanced
industrialized
states
of
the
West”
Mango
1993,
p.
726).
Their
inner
struggles
boil
down
to
an
identity
crisis:
should
Turkey
pursue
western
methods
of
growth
to
achieve
development
or
should
they
hold
on
to
their
cultural
roots?
Through
policies
such
as
trade
liberalization
and
attempting
to
joining
the
European
Union,
the
path
toward
development
seems
to
be
the
route
they
are
pursuing.
Based
on
the
Solow
growth
model,
there
is
a
point,
deemed
the
steady
state,
at
which
economic
development
is
attained.
After
altering
the
definition
of
development
to
make
it
more
realistic,
Turkey
is
intentionally
growing
toward
their
steady
state,
proving
it
is
possible
for
development
to
be
realized
in
the
Middle
East.
In
order
to
attain
the
goal
of
development,
Turkey
needs
to
make
significant
increase
in
human
capital
investment
and
adopt
a
marginally
looser
fiscal
policy
to
afford
the
corresponding
investments.
Scope
of
the
Paper
This
paper
seeks
to
prove
that
through
a
case
study
of
Turkey,
fully
realized
development
is
obtainable
in
the
Middle
East
by
implementing
realistic
expectations

4. 4
on
classical
growth
and
development
models.
Before
going
any
further,
it
is
important
to
define
what
countries
are
included
in
the
Middle
East.
According
to
the
CIA
World
Factbook,
there
are
19
countries
in
the
Middle
East.
The
region
is
a
conglomerate
of
countries
bordered
on
the
north
by
Georgia,
East
by
Iran,
South
by
the
Arabian
Peninsula
and
West
by
Israel
(Middle
East).
In
terms
of
economic
models,
the
Solow
growth
model
and
how
it
defines
development
will
be
discussed.
Through
critiques,
the
model’s
assumptions
will
be
challenged
and
a
new
definition
of
development
will
be
created.
Next,
the
economic
history
of
Turkey
will
be
examined,
along
with
previous
policies
that,
if
implemented
correctly,
could
have
significantly
increased
growth
and
moved
the
country
closer
to
development.
In
closing,
the
Human
Development
Index
will
be
examined
and
some
of
its
aspects
will
be
added
into
the
initial
definition
of
development.
Policies
in
line
with
the
new
definition
will
be
recommended
for
Turkey
and
the
question
of
whether
or
not
they
can
be
practically
implemented
in
other
Middle
Eastern
countries
will
be
discussed.
It
is
important
to
note
that
this
paper
is
not
focused
on
the
growth
and
development
of
the
Middle
East,
but
rather
that
of
Turkey.
Given
its
relative
success,
Turkey
will
be
used
as
an
example
for
the
rest
of
the
region
to
follow
and
learn
from.
To
the
extent
that
the
policies
implemented
in
Turkey
relate
to
other
Middle
Eastern
countries,
recommendations
will
be
extrapolated
to
them
as
well.

5. 5
The
Solow
Growth
Model
and
an
Adaptation
In
order
to
provide
background
for
the
topic
of
economic
development,
it
is
imperative
to
discuss
economic
growth
models
and
how
they
relate
to
development.
Specifically,
this
section
will
discuss
the
Solow
Growth
Model.
Richard
Solow
(1956)
improved
upon
previous
literature
that
attempted
to
model
economic
growth.
The
prominent
theory
to
explain
growth
prior
to
Solow
was
the
Harrod-­‐Domar
(HD)
model
(Harrod
1939;
Domar
1946).
Though
these
models
were
independently
written,
they
touched
on
the
same
notion
of
economic
growth
being
a
result
of
a
country’s
productivity
of
capital
and
level
of
savings.
As
Harrod
puts
it,
“A
unique
warranted
line
of
growth
is
determined
jointly
by
the
propensity
to
save
and
the
quantity
of
capital
required
by
technological
and
other
considerations
per
unit
increment
of
total
output”
(1939,
p.
23).
Again,
by
finding
the
amount
of
capital
available
and
the
willingness
to
save
in
a
given
country,
a
growth
rate
can
be
determined.
Therefore,
according
to
the
HD
model,
the
country’s
growth
rate
is
determined
exogenously.
For
the
most
part,
Solow
agrees
with
the
Harrod-­‐Domar
model.
He
affirms
that
domestic
savings
is
key
to
economic
growth,
and
that
capital
and
labor
are
the
two
essential
inputs
in
production.
However,
regarding
the
latter,
he
negates
the
notion
of
fixed
proportions
of
capital
and
labor,
meaning
one
input
cannot
be
equally
substituted
for
the
other.
The
fixed
proportions
assumption
is
what
he
considers
to
be
critical
to
the
balance
of
the
equilibrium
growth
in
the
HD
model.
In
contrast,
Solow
notes
that
in
the
long
run,
changes
in
technology
necessitate
a

6. 6
change
in
the
labor-­‐capital
ratio,
hence
disarming
the
HD
model
leading
to
the
Solow
model1.
After
describing
three
key
assumptions
above,
a
deeper
look
at
the
model
itself
is
required.
As
labor
and
capital
create
output,
or
income
in
the
case
of
Solow’s
example,
that
income
can
either
be
consumed
or
saved.
Therefore,
there
are
two
functions
within
the
model,
that
of
output
and
savings.
Given
that
savings
is
defined
by
the
marginal
propensity
to
save,
it
is
a
fixed
fraction
of
income2,
and
thus
lies
below
the
consumption
function.
There
is
one
other
essential
function
to
the
model,
which
relates
to
the
inflow
and
outflow
of
capital
in
a
country.
Solow
defines
the
function
as
the
size
of
the
labor
force
multiplied
by
the
capital-­‐labor
ratio,
otherwise
known
as
the
country’s
capital
replacement
needs.
Unlike
the
diminishing
returns
model
of
the
consumption
and
savings
functions3,
the
replacement
needs
of
a
country
is
a
ray
beginning
at
the
origin
of
the
graph.
The
point
of
intersection
between
the
income
function
and
the
capital
replacement
function
is
of
major
importance
to
the
model.
As
Solow
writes,
“At
the
point
of
intersection,
[capital
replacement
rate]
=
[income
function]
and
[capital-­‐labor
ratio]
=
0.
If
the
capital-­‐labor
ratio
r*
should
ever
be
established,
it
will
be
maintained,
and
capital
and
labor
will
grow
thenceforward
in
proportion.
By
constant
returns
to
scale,
real
output
will
1
There
is
one
more
critical
assumption,
specifically
that
of
full
employment,
that
the
model
hinges
on.
This
will
be
discussed
later
in
the
paper.
2
MPS
is
fixed
in
the
short-­‐run,
however
as
noted
above,
a
change
in
technology
could
alter
the
labor-­‐capital
ratio,
which
in
turn
could
also
affect
the
country’s
MPS.
3
The
nature
of
the
income
and
savings
functions
are
derived
from
the
Cobb-­‐Douglas
production
function,
which
assumes
diminishing
marginal
returns
as
capital
and
labor
continue
to
rise.
Hence,
as
capital
and
labor
rates
rise
in
this
example,
thus
moving
along
the
income
and
savings
curve,
diminishing
returns
are
seen.

7. 7
also
grow
at
the
same
relative
rate...and
output
per
head
of
labor
force
will
be
constant”
(1956,
p.
70)4
This
important
intersection
is
deemed
the
steady
state
of
a
country.
In
other
words,
the
point
at
which
the
country
is
able
to
produce
just
enough
to
meet
the
depreciation
of
the
labor
force
is
the
point
at
which
growth
is
no
longer
being
realized,
otherwise
known
as
their
steady
state.
Solow
goes
on
to
write
that
if
a
country
is
not
at
their
steady
state,
thus
their
capital
replacement
need
is
either
outweighing
their
production
or
vice
versa,
the
country’s
allocation
of
resources
will
be
tweaked
until
their
steady
state
is
achieved.
It
is
important
to
keep
in
mind
that
this
model
is
focused
on
the
long
term;
therefore
the
process
of
altering
the
capital-­‐
labor
ratio
will
take
a
significant
amount
of
time.
This
can
be
verified
in
the
real
world
by
the
presence
of
varying
levels
of
development
across
the
globe
and,
on
a
micro
level,
the
changes
in
development
of
a
country
over
time.
The
notion
of
a
steady
state
indicates
there
is
a
point
at
which
a
country
can
become
economically
developed.
In
a
long-­‐run,
according
to
Solow,
it
should
be
feasible
for
all
countries
to
achieve
their
steady
states,
thus
achieving
economic
development.
If
this
holds,
then
shouldn’t
there
be
more
countries
at
their
steady
states?
The
answer
is
no
and
is
based
on
another
critical
assumption
made
in
the
Solow
Model.
The
reason
more
countries
have
not
realized
their
steady
states
is
because
the
Solow
model
hinges
on
the
notion
of
full
employment5.
As
he
states
in
his
model,
4
The
text
in
brackets
was
substituted
for
variables
used
in
Solow’s
equation.
They
were
omitted
from
this
paper
because
they
do
not
provide
any
added
value;
the
description
of
the
variable
was
deemed
suitable
for
explanatory
purposes.

8. 8
“In
[Equation
3]
L
stands
for
total
employment;
in
[Equation
4]
L
stands
for
the
available
supply
of
labor.
By
identifying
the
two
we
are
assuming
that
full
employment
is
perpetually
maintained”
(1956,
p.
67).
Therefore,
in
order
to
achieve
a
steady
state,
a
country
must
employ
all
available
labor
supply.
Otherwise,
it
will
fall
short
of
development
and
the
production
will
not
equal
the
country’s
capital
replacement
needs.
Research
done
by
A.
W.
Phillips
(1958)
refutes
Solow’s
assumption,
noting
that
it
is
not
beneficial
for
a
country
to
pursue
total
employment.
According
to
the
Phillips
curve,
if
a
country
were
to
reach
zero-­‐percent
unemployment,
the
inflation
rate
would
increase
dramatically,
indicating
that
there
is
a
tradeoff
between
unemployment
and
inflation.
Given
that
a
country
does
not
want
to
see
dramatic
increases
in
inflation,
it
is
thus
derived
that
there
is
an
optimum
level
of
unemployment;
one
that
is
greater
than
zero.
Therefore,
a
country
cannot
realistically
achieve
their
steady
state,
or
economic
development
in
strict
terms
of
the
Solow
model
because
the
full
employment
assumption
cannot
be
met.
Taking
this
idea
a
step
further,
Stiglitz
(1974)
offers
an
adaptation
to
the
Solow
model.
Instead
of
pursuing
their
natural
steady
state,
a
country
should
choose
a
path
of
production
that
suits
their
country
and
seek
the
corresponding
steady
state.
In
order
words,
a
country
should
employ
their
resources
in
the
best
interest
of
their
country
instead
of
what
is
theoretically
recommended.
Therefore,
a
country
could
potentially
have
multiple
steady
states
depending
on
which
production
path,
or
policy
they
choose.
A
critical
assumption
to
this
argument
is
that
a
country’s
policy
makers
are
choosing
programs
that
are
in
the
best
interest
of
the
country.
5
The
full
employment
assumption,
as
are
many
other
assumptions,
is
also
a
carry-­‐
over
from
the
HD
model.

9. 9
Therefore,
the
deployment
of
labor
and
capital
is
intentional.
Though
their
steady
state
as
defined
by
the
Solow
model
is
unobtainable,
policy
makers
will
utilize
labor
and
capital
resources
to
come
as
close
as
possible
to
that
achievement.
This
notion
implies
a
new
definition
of
development,
one
that
is
based
on
both
growth
and
policy.
Therefore,
economic
development
will
be
defined
as
the
end
result
of
growth
aimed
at
achieving
a
country’s
policy-­‐determined
steady
state6.
Next,
Turkey’s
historical
growth
will
be
discussed
and
their
potential
for
development
will
be
considered.
The
Development
of
Turkey
By
most
indicators,
Turkey
is
considered
to
be
a
developed
nation.
Turkey
became
a
member
of
NATO
in
1952
and
joined
the
UN
two
years
later.
These
two
organizations
can
be
viewed
as
an
elite
club
of
the
most
developed
countries
in
the
world,
as
is
in
fact
used
by
Nations
Online
as
a
benchmark
to
be
considered
as
a
developed
country7.
They
are
also
slowly
moving
away
from
their
agricultural
roots
towards
a
more
service-­‐based
economy
(Altug,
Filiztekin
&
Pamuk,
2008),
which
can
be
also
viewed
as
indication
of
a
country
moving
toward
economic
development.
In
terms
of
infrastructure,
The
World
Bank
defines
Turkey
as
an
upper-­‐middle
income
country,
noting
that
its
income
per
capita
is
above
average
for
6
In
the
Suggested
Future
Policies
section,
this
definition
will
take
a
step
further,
however
this
definition
is
suitable
for
now.
7
Turkey.
(n.d.).
Nations
Online.
Retrieved
October
16,
2014,
from
http://www.nationsonline.org/oneworld/turkey.htm

10. 10
Europe
and
Central
Asia8.
However,
as
it
relates
to
theoretical
economic
models
as
well
as
research
that
will
be
described
below,
Turkey
still
has
room
to
grow
before
it
reaches
development.
Therefore,
Turkey
will
be
considered
a
semi-­‐developed
economy9.
In
order
to
show
the
progress
Turkey
has
made
and
to
prove
that
development
can
be
further
realized
in
Middle
Eastern
countries,
a
history
of
its
long-­‐term
growth
will
be
discussed.
Altug,
Filiztekin
and
Pamuk
(2008)
reviewed
the
growth
timeline
for
Turkey
beginning
in
1880
and
ending
in
2005.
They
split
this
timeframe
into
four
distinct
eras,
the
first
of
which
was
from
1880
to
1913.
Turkey
saw
modest
GDP
per
capita
growth
due
to
their
export-­‐oriented
agricultural
model
in
their
first
era,
however,
this
modest
growth
did
not
compare
to
the
booms
being
realized
in
Europe
and
America.
The
authors
indicate
that
Turkey’s
GDP
per
capita
as
a
percentage
relative
to
high-­‐income
economies
decreased
eight
percent
from
1880
to
1913
(2008,
p.
398).
During
this
timeframe,
Turkey
took
steps
back
from
development
and
therefore
had
an
even
greater
hurdle
to
overcome
than
initially
thought.
The
second
era
ran
from
the
start
of
World
War
I
in
1914
to
1950.
During
this
time,
Turkey
experienced
wild
volatility
due
to
population
and
GDP
fluctuation.
Once
the
Great
Depression
hit,
Turkey
was
forced
to
majorly
shift
its
policies.
Altug,
8
Turkey.
(n.d.).
Central
Intelligence
Agency.
Retrieved
October
13,
2014,
from
https://www.cia.gov/library/publications/the-­‐world-­‐factbook/geos/tu.html
9
This
notion
is
backed
by
Turkey’s
economic
data
relative
to
the
rest
of
the
world.
For
instance,
though
its
GDP
ranks
in
the
top
20
in
the
world,
Turkey’s
per
capita
GDP
ranks
90th
(The
World
Factbook:
Turkey).

11. 11
Filiztekin
and
Pamuk
write,
“...The
Great
Depression
ushered
in
new
economic
policies
in
Turkey,
[namely]
protectionism
and
inward-­‐oriented
industrialization
led
by
the
state
sector”
(2008,
p.
400).
Given
the
tumultuous
world
economic
environment
at
the
time,
it
was
a
logical
decision
to
apply
protectionist
policies.
However,
by
the
time
World
War
II
began,
Turkey’s
protectionist
policies
caused
them
to
face
another
economic
downturn.
By
1949,
they
had
recovered
and
were
ready
to
begin
a
new
era.
The
third
era
of
Turkey’s
developmental
history
began
in
1950
and
lasted
until
1979.
From
a
world
perspective,
this
time
period
was
rich
with
economic
growth.
Globalization
was
in
full
force,
however
Turkey
chose
to
apply
import-­‐
substitution
policies
and
thus
removing
themselves
from
the
global
trade
market.
In
a
study
analyzing
Turkish
trade
policies,
Yilmaz
(2002)
writes,
“It
was
a
widely
held
view
that
rapid
industrialization
can
only
be
achieved
with
the
help
of
the
import
substitution
policy”
(p.
61).
Furthermore,
he
adds
that
Turkey
looked
to
the
self-­‐
guided
increase
in
Russian
development
around
the
same
time
and
determined
it
would
be
a
good
example
to
follow.
Though
these
policies
were
not
necessarily
unsuccessful,
they
did
limit
Turkey’s
potential
for
economic
growth
(Kar,
Peker
&
Kaplan
2008).
Once
policymakers
figured
out
that
domestic
industry
growth
was
not
the
best
option,
they
implemented
trade
and
financial
liberalization
policies
beginning
in
1980,
which
will
be
discussed
below,
denoting
the
fourth
an
final
era.
Growth
fluctuated
during
the
final
era
(Özatay
and
Sak
2002),
but
on
average
the
Turkish
GDP
per
capita
grew
faster
than
its
high-­‐income
counterparts
and
the
rest

12. 12
of
the
world.
By
2005,
Turkey’s
GDP
per
capital
was
117%
of
the
world
average,
posting
a
40%
increase
from
1950
(Altug
et.
al.
2008).
There
is
no
doubt
that
marginal
development
was
realized
in
Turkey,
however
the
notion
of
full
development
is
not
yet
proven.
In
order
to
obtain
that
status,
the
country
will
have
to
learn
from
their
previous
policy
mistakes
and
implement
those
findings
as
they
continue
to
grow
over
time.
Next,
some
of
the
policies
mentioned
briefly
in
this
section
will
be
examined
in
greater
detail.
Their
lessons
will
then
be
applied
to
future
policy
recommendations
in
the
hope
that
Turkey
can
achieve
full
economic
development.
Previous
Growth
Policies
That
Were
Not
Fully
Realized
One
attempt
at
achieving
a
higher
level
of
development
was
the
liberalization
of
the
trade
and
financial
markets
during
the
1980s.
Beginning
with
trade
policy,
it
was
noted
above
that
until
the
1980s,
Turkey
did
not
consider
an
open
trade
policy
to
be
their
best
option.
Yilmaz
(2002),
however,
would
argue
that
it
was
a
much
better
strategy
than
remaining
closed.
In
order
to
prove
this,
he
researched
the
outcomes
of
South
Korea,
or
Korea
for
simplicity,
which
implemented
liberalized
trade
policies
during
the
same
time
that
Turkey
remained
closed,
and
compared
the
two
country’s
results.
He
begins
by
pointing
out
that
although
the
two
countries
were
similar
in
population
size
and
both
had
major
OECD
trade
partners,
Turkey
had
a
more
robust
economy
to
begin
with.
Yilmaz
writes,
“By
1955...Turkish
per
capita
income
was
three
times
than
that
of
Korea...Turkish
exports
were
fifteen
times
those
of
Korea,
and
the
Turkish
savings
rate
was
much
higher
than
Korea”

13. 13
(2002,
p.
59).
From
this
data,
it
is
apparent
that
Turkey
got
off
to
a
significant
head
start
over
Korea.
It
was
only
a
few
years
later,
in
the
early
1960s
to
be
exact,
that
Korea
began
its
trade
liberalization
while
Turkey
remained
protected
by
tariffs
and
quotas.
In
Korea’s
case,
they
focused
heavily
enough
on
trade
to
increase
their
exports
relative
to
GNP
nearly
tripled
to
31.9%
from
1971
to
1981;
In
contrast,
the
Turkish
remained
protected
and
their
exports
to
GNP
decreased
from
5.2%
to
4.6%
over
the
same
time
frame.
The
results
of
the
respective
policies
are
quite
telling.
Though
Turkey’s
GNP
per
capita
quintupled
from
1970
to
1990,
Korea’s
grew
by
over
2,300%10.
To
reiterate
this
point,
it
is
not
being
argued
that
Turkey
did
not
see
economic
development
through
their
policies;
in
fact
they
did.
However,
relative
to
a
country
that
opened
its
door
to
the
world
trade
market,
Turkey’s
growth
is
limited11.
In
a
study
on
the
Turkish
financial
liberalization,
Özatay
and
Sak
(2002)
describe
the
main
goal
of
this
process
by
saying,
“It
is
aimed
at
strengthening
the
role
of
economic
agents
in
the
fund
allocations
process
by
limiting
the
role
of
government”
(p.
6).
In
other
words,
the
power
of
economic
reform
was
shifted
from
the
government
to
the
institutions
that
provide
private
financing,
namely
banks.
During
this
process,
Özatay
and
Sak
sought
to
find
evidence
of
a
deepening
of
the
financial
sector
and
if
that
deepening
translated
into
countrywide
economic
growth.
As
it
relates
to
this
particular
paper,
the
latter
will
be
addressed
in
greater
detail.
10
Statistics
were
calculated
from
Table
1
on
page
60
in
Yilmaz
(2002).
11
The
authors
note
that
since
the
1980s,
Turkey
has
maintained
an
open
trade
policy
and
have
used
it
to
their
advantage.

14. 14
In
the
study,
Özatay
and
Sak
found
that
liberalization
resulted
in
a
significant
deepening
of
the
financial
sector.
Total
bank
deposits,
the
purchase
of
securities,
and
total
financing
all
grew
relative
to
GDP
after
the
liberalization
(2002,
p.
8).
However,
there
was
a
peculiar
finding
when
the
balance
sheets
of
banks
were
analyzed
in
greater
depth.
Although
total
bank
assets
grew
at
an
impressive
rate,
both
in
real
terms
and
as
a
percent
of
GPD,
total
credit
growth
relative
to
GDP
actually
declined.
This
finding
presents
a
major
blockade
for
growth.
They
write,
“According
to
the
financial
repression
theory,
the
economic
growth
impact
of
financial
liberalization
depends
upon
the
financial
intermediation
process”
(2002,
p.
9).
Though
banks
were
able
to
increase
their
level
of
reserves,
they
were
not
utilizing
it
to
produce
more
credit.
Without
an
increase
in
credit,
firms
could
not
borrow
the
funds
necessary
to
achieve
growth.
At
the
aggregate,
this
led
to
the
less
than
expected
levels
of
GDP
growth
in
the
country
during
the
1980’s
and
90’s12.
To
further
understand
the
discrepancy
between
asset
and
credit
growth,
Özatay
and
Sak
looked
into
exactly
why
there
was
no
credit
expansion
after
financial
liberalization
policies
were
implemented.
The
largest
factor
involved
was
increased
risk
during
the
same
time
period;
namely
that
of
credit
risk,
interest
rate
risk,
and
foreign
exchange
risk
(2002,
p.
13).
Beginning
with
the
latter,
by
opening
up
their
financial
market,
Turkey’s
banks
became
prone
to
volatility
in
foreign
exchange
rates,
which
could
potentially
hurt
their
earnings.
Interest
rate
risk
is
based
on
a
similar
notion;
by
letting
the
market
dictate
the
interest
rate,
banks
began
to
see
increased
volatility
and
were
weary
of
it.
Credit
risk
is
defined
by
the
risk
of
12
It
should
also
be
noted
that
this
policy
was
launched
in
the
midst
of
worldwide
recession,
so
the
lack
of
growth
cannot
be
solely
related
to
lack
of
credit.

15. 15
borrowers
defaulting
on
their
loans.
Though
a
risk
on
its
own,
the
increase
in
volatility
of
interest
and
foreign
exchange
rates
could
affect
the
ability
for
large
debtors
to
repay
their
loans,
thus
increasing
potential
defaults.
Additionally,
Özatay
and
Sak
found
that
firms
themselves
were
deterred
from
taking
out
credit
due
to
the
increased
volatility,
decreasing
credit
demand
all
together.
The
overall
impact
of
sluggish
credit
growth
and
a
decrease
in
demand
for
new
credit
played
a
major
role
in
the
lack
of
growth
in
the
two
decades
following
financial
liberalization
in
Turkey.
To
prove
this,
Özatay
and
Sak
ran
a
Granger-­‐
Causality
regression
of
how
well
real
credit
and
real
liabilities
were
able
to
predict
real
income
growth.
They
used
lagged
real
income
growth
as
the
dependent
variable
and
used
lagged
real
credit
and
real
liabilities
as
predictive
variables.
After
testing,
they
write,
“In
sharp
contrast
[to
real
liabilities],
real
credit
did
contain
predictive
power
for
the
growth
rate
of
real
income
in
both
of
the
samples”
(Özatay
and
Sak
2002,
p.
13).
In
other
words,
they
were
able
to
determine
that
Turkey’s
slow
economic
growth
was
in
fact
caused
by
poor
credit
growth.
Therefore,
the
policy
did
not
have
the
effects
that
were
initially
expected.
Maintaining
a
course
of
closed
trade
policies
and
the
inefficient
implementation
of
financial
liberalization
negatively
affected
Turkey’s
economic
growth
potential.
In
addition
to
the
research
provided
above,
Kar,
Peker
and
Kaplan
(2008)
studied
the
relationship
between
both
methods
of
liberalization
and
growth.
After
analyzing
the
important
factors
to
consider
when
measuring
the
level
of
trade
and
financial
liberalization,
the
authors
created
indexes
for
both
and
ran
a
regression
with
economic
growth
as
the
dependent
variable.
They
found
that
levels

16. 16
of
trade
and
financial
liberalization
both
have
a
positively
affect
economic
growth.
In
other
words,
the
more
time
spent
at
lower
levels
of
liberalization
resulted
in
forgone
growth.
By
waiting
nearly
thirty
years
to
open
trade
barriers
and
another
twenty
to
fully
implement
financial
liberalization,
Turkey
fell
behind
and
therefore
have
yet
to
fully
realize
its
development
potential.
Suggested
Future
Policies
for
Turkey
and
the
Middle
East
Contrary
to
previous
literature
on
economic
growth
that
is
based
solely
on
production
and
output,
new
research
has
focused
more
on
how
economic
growth
impacts
society
as
a
whole.
The
Human
Development
Index
(HDI)
looks
at
the
development
of
the
people
within
the
country
rather
than
just
a
percentage
increase
in
GDP.
According
to
the
United
Nations
Development
Programme
website,
“The
Human
Development
Index
(HDI)
is
a
summary
measure
of
average
achievement
in
key
dimensions
of
human
development:
a
long
and
healthy
life,
being
knowledgeable
and
have
a
decent
standard
of
living.
The
HDI
is
the
geometric
mean
of
normalized
indices
for
each
of
the
three
dimensions”
(UNDP).
Traditional
economic
growth
theory
of
increasing
GDP
per
capita
is
present
in
the
model
in
the
form
of
standard
of
living.
The
other
two
factors,
life
expectancy
and
knowledge,
are
trickle-­‐down
effects
from
the
standard
of
living
factor.
The
former
is
calculated
as
the
life
expectancy
at
birth,
while
the
latter
is
calculated
using
the
mean
years
of
schooling
and
the
expected
years
of
schooling.
Ultimately,
if
a
country
is
experiencing
a
period
of
growth,
they
will
reinvest
in
their
domestic
institutions.
By
providing
staple
institutions
like
hospitals
and
schools
with
proper
resources,
they
will
be
able
to
grow
and
provide
a
better
service
to
the
people.
With
this
new

17. 17
information,
the
definition
for
economic
development
will
once
again
be
added
to.
Henceforth,
economic
development
will
be
defined
as
the
end
result
of
growth
aimed
at
increasing
the
quality
of
civilian
life
through
attaining
a
country’s
policy-­‐
determined
steady
state.
If
Turkey
wants
to
continue
their
growth
and
potentially
realize
their
full
developmental
potential,
they
will
need
to
determine
exactly
how
to
invest
their
dollars
back
into
the
nation
so
that
it
provides
the
greatest
good
to
Turkish
civilians.
Research
has
been
conducted
in
countries
that
are
similar
to
Turkey
on
how
to
best
allocate
their
resources
to
achieve
a
higher
Human
Development
Index.
Levin
and
Raut
(1997)
collected
data
from
30
semi-­‐developed
countries
and
sought
to
prove
the
causational
relationship
of
increased
human
capital
on
economic
growth.
Oddly,
they
found
no
relationship
whatsoever
between
the
two.
Even
after
accounting
for
time
lags,
population
growth
and
export
growth,
human
capital
seemed
to
have
no
effect
on
changes
in
GDP.
However,
Levin
and
Raut
took
their
research
a
step
further
and
sought
to
understand
if
human
capital
growth
specifically
in
the
export
sector
would
result
in
growth.
They
hypothesized
that
the
export
sector
values
quality
of
human
capital
more
so
than
the
economy
as
a
whole
due
to
the
technologically
driven
nature
of
the
industry
(Levin
&
Raut
1997).
In
a
sector
with
a
steeper
learning
curve,
higher
skilled
workers
will
be
more
productive
than
lower
skilled.
They
compiled
data
on
average
educational
attainment
and
primary
and
secondary
school
enrollment
rates
for
employees
in
the
export
sector
and
incorporated
it
into
a
productivity
function.
They
found
that
human
capital
was
positively
significantly
correlated
to
the
growth

18. 18
of
the
export-­‐to-­‐GDP
ratio,
while
the
growth
of
export-­‐to-­‐GDP
on
its
own
is
not
(Levin
&
Raut
1997,
p.
167).
In
other
words,
the
level
of
human
capital
in
the
workforce
significantly
affects
the
growth
of
a
semi-­‐developed
country’s
exports
relative
to
their
GDP.
Fittingly,
Levin
and
Raut
relate
their
findings
to
the
export
sectors
of
Asian
Tigers.
They
write,
“The
externalities
and
increasing
returns
to
scale
attributed
to
the
export
sector
in
newly
industrializing
countries
like
Hong
Kong
and
Korea
cannot
be
achieved
without
simultaneous
public
investment
in
education”
(Levin
&
Raut
1997,
p.
167).
As
examined
above,
another
potential
reason
for
the
tremendous
growth
of
Korea
is
related
to
the
investment
in
human
capital
backing
their
export-­‐
oriented
policies.
Investing
in
human
capital
has
an
increase
on
labor
force
productivity,
and
therefore
increases
total
factor
productivity
(Yilmaz
2002).
By
getting
the
labor
force
to
become
more
productive
over
time
through
the
exit
of
under-­‐educated
workers
and
their
subsequently
educated
replacements,
growth
was
achieved.
Turkey
is
has
immense
potential
when
it
comes
to
human
capital.
According
to
Ederer
et.
al.
(2011;
qtd.
in
Owings
et.
al.
2012),
this
is
due
to
their
increasing
birth
rate
and
lack
of
brain-­‐drain.
Additionally,
beginning
in
1924,
Turkey
centralized
its
education
under
the
Ministry
of
Education,
increasing
the
chance
for
non-­‐religious
students
to
receive
an
education
(Owings
et.
al.
2012).
Since
then,
literacy
rates
have
gone
from
10%
to
89%
in
2010.
However,
the
quality
of
their
education
is
extremely
low.
Owings
writes,
“For
the
most
part,
schools
are
not
preparing
students
with
the
complex
competencies
and
achievement
they
need
to

19. 19
be
competitive
in
the
high-­‐knowledge,
high-­‐tech
Turkish
economy”
(2012,
p.
51).
It
is
one
thing
to
provide
educational
opportunities
for
citizens,
but
it
is
another
to
make
sure
that
education
is
suitable.
Given
the
high-­‐tech
nature
of
the
Turkish
economy,
in
order
for
their
investments
in
education
to
be
realized
in
the
form
of
growth,
students
need
to
be
taught
how
to
perform
the
skills
required
of
their
domestic
industries.
Otherwise,
the
country
will
not
see
a
growth
in
GDP
at
the
hands
of
human
capital.
The
idea
of
increasing
investment
in
human
capital
may
be
a
daunting
one
for
Turkey.
In
order
to
do
so,
a
looser
fiscal
policy
would
have
to
be
adopted.
Since
the
turn
of
the
century,
Altug
et.
al.
(2008)
point
out
that
Turkey
has
kept
a
tight
stance
on
fiscal
policy.
Mainly
this
was
a
response
to
the
loosening
after
the
1970s
oil
shock
and
subsequent
increases
in
inflation
and
government
deficit.
Figure
113
Figure
1
shows
the
relative
changes
in
inflation
and
government
spending
due
to
loose
fiscal
policy
over
time.
As
is
visible,
both
graphs
show
relative
stability
up
until
1970,
and
have
been
experiencing
a
steady
upward
trend
up
until
2000.
At
that
13
Altug
et.
al.
(2008)

20. 20
point,
the
government
tightened
up
their
fiscal
policy
as
a
result
of
the
millennium
financial
crisis,
thus
cutting
back
on
spending
significantly.
Altug
et.
al.
write,
“In
order
to
finance
a
growing
fiscal
deficit,
public
investment,
including
expenditures
on
education,
declined
sharply
and
continues
to
remain
low”
(2008,
p.
420).
By
reducing
spending
towards
education,
therefore
reducing
investments
in
human
capital,
tightening
of
the
fiscal
policy
could
have
resulted
in
a
negative
affect
on
the
accumulation
of
knowledge.
Because
knowledge
is
a
component
of
the
HDI
index,
the
decline
in
knowledge,
ceteris
paribus,
would
result
in
a
move
away
from
development.
Furthermore,
the
fiscal
tightening,
which
caused
a
decrease
in
the
potential
human
capital
stock,
did
not
exhibit
an
economically
developmental
focus.
The
logical
policy
prescription
would
be
to
loosen
fiscal
policy
and
increase
spending
on
education.
However,
given
the
current
state
of
their
economy,
this
recommendation
would
not
be
advisable
at
this
time.
As
of
2013,
Turkey’s
budget
deficit
relative
to
GDP
is
2.6%
and
their
inflation
rate
is
7.6%,
ranking
91st
and
192nd
in
the
world,
respectively
(CIA
World
Factbook:
Turkey).
Before
any
fiscal
policies
are
altered,
Turkey
will
have
to
reduce
both
of
these
values
and
find
macroeconomic
stability.
Henceforth,
all
policy
recommendations
related
to
domestic
investment
and
spending
are
to
be
advised
once
stability
is
achieved.
In
terms
of
the
Middle
East
as
a
whole,
there
are
also
many
challenges
facing
the
improvement
of
education,
most
of
which
are
found
in
Turkey
as
well.
Chapman
and
Miric
(2009)
studied
the
region’s
education
sector
and
found
that,
similar
to
Turkey,
there
is
immense
potential
for
increases
in
human
capital.
However,
that
potential
is
not
being
realized
in
the
region
(Chapman
&
Miric
2009).
Similar
to

21. 21
Turkey
(Owings
et.
al.
2012),
the
main
reason
for
this
is
the
disparity
between
education
participation
and
the
quality
of
that
education.
Specifically,
education
policies
put
that
emphasis
on
participation
rate,
which
increased
the
percentage
of
school-­‐aged
children
going
to
school
in
the
region.
This
shift
in
demand
for
education
was
met
with,
and
sometimes
even
lagged
behind
a
shift
in
teacher
supply14.
Interestingly,
though
the
surplus
of
teachers
decreased
class
sizes,
which
should
in
theory
increase
educational
understanding
of
the
students,
the
quality
of
education
decreased15,
hence
the
disparity
of
participation
and
quality.
On
this
point,
Chapman
and
Miric
write,
“Instructional
practice
has
not
improved,
nor
has
student
learning
increased
despite
the
potential
of
smaller
class
sizes
to
enable
individualized
instruction”
(2009,
p.
320).
The
main
reason
for
that
decline,
as
mentioned,
is
the
stagnation
of
instructional
practices.
Though
the
study
gives
no
evidence
as
to
why
quality
has
gone
down,
it
is
inferred
that
there
is
a
disconnect
between
the
capabilities
of
the
teacher,
which
have
increased
on
an
aggregate
level
(Miric
&
Chapman
2006;
qtd.
in
Chapman
&
Miric
2009),
and
the
quality
of
education
they
are
providing
to
the
students.
An
alternative
hypothesis
may
be
that
due
to
the
increase
in
percentage
of
students
in
school,
there
are
more
students
in
school
now
that
would
not
have
otherwise
attended
in
the
past.
That
is
to
say,
the
average
intelligence
of
students
relative
to
years
past
may
be
declining
due
to
the
14
This
is
not
the
case
for
Turkey,
where
demand
for
education
exceeded
the
supply
of
teachers
(Owings
et.
al.
2012).
15
Oddly
enough,
this
was
the
same
result
in
Turkey,
though
it
resulted
from
different
factors
(Owings
et.
al.
2012).

22. 22
inclusion
of
students
who
are
less
intelligent
than
those
who
previously
attended16.
Regardless
of
the
reason,
educational
quality
will
have
to
be
increased
across
the
region
to
realize
development.
Without
quality,
the
human
capital
stock
cannot
be
increased,
and
therefore
will
have
no
effect
on
growth
towards
development.
One
of
the
most
promising
policies
to
improve
educational
quality
is
the
Turkish
FATIH
initiative.
Noting
that
their
current
schooling
methods
are
lacking
practical
application,
FATIH
is
attempting
to
make
every
classroom
in
the
country
a
“Smart
Classroom”
(FATIH).
By
connecting
their
students
with
the
latest
technological
instruments,
the
Turks
hope
to
prepare
their
students
for
the
fast-­‐
paced
and
tech-­‐reliant
world
they
will
enter
post-­‐schooling.
In
a
pilot
phase
of
the
project,
the
Ministry
of
Education
distributed
8,500
tablet
PCs
to
52
high
schools
in
17
provinces.
Immediately
following,
they
expanded
their
scope
and
provided
49,000
tablets
to
81
provinces
across
the
country.
Though
impressive,
this
policy
will
face
enormous
challenges.
First
and
foremost,
teachers,
as
well
as
students
will
have
to
learn
how
to
use
the
new
technology
in
order
to
teach
with
it
effectively.
It
is
very
possible
for
the
teachers
themselves
could
be
just
as
clueless
as
the
students
when
it
comes
to
understanding
how
the
tablets
work.
Furthermore,
Michael
Trucano,
an
information
and
communication
technologist
specializing
in
educational
policies
for
the
World
Bank,
took
the
concept
a
step
further
by
saying,
“With
every
student
equipped
with
a
tablet,
connected
schools
and
interactive
projection
devices
in
every
classroom,
there
will
be
massive
needs
for
useful,
relevant,
high-­‐quality
digital
teaching
and
16
More
research
on
this
topic
will
need
to
be
completed
before
it
is
accepted
as
a
viable
reason
for
lower
student
achievement.

23. 23
learning
materials”
(Trucano
2013).
Content
creation
will
be
a
major
hurdle
for
the
FATIH
initiative
given
the
inequality
of
schooling
across
the
country
(Owings
et.
al.
2012).
Unless
there
are
other
major
economic
reforms,
such
as
rolling
out
a
uniform
curriculum
much
like
the
Common
Core
Standards
in
the
United
States,
each
province,
if
not
school
district,
will
have
to
create
its
own
content.
With
an
already
struggling
teacher
workforce,
putting
the
responsibility
of
digital
content
creation,
an
otherwise
foreign
concept
in
their
hands
might
not
result
in
the
quality
of
materials
the
Ministry
of
Education
desires.
Obviously,
this
policy
and
its
desired
outcomes
are
incredibly
bold.
That
being
said,
in
order
to
catch
up
to
the
technology
advances
of
the
world
and
prepare
Turkish
students
for
an
increasingly
tech-­‐savvy
workplace,
it
is
absolutely
a
step
in
the
right
direction.
The
implementation
of
a
similar
policy
in
other
Middle
Eastern
countries
would
most
likely
face
similar
challenges,
but
the
upside
potential
remains.
For
the
richer
countries
in
the
region,
financial
costs
associated
with
this
policy
recommendation
should
be
relatively
insignificant,
whereas
for
poorer
countries
such
as
Yemen17,
the
implementation
would
be
nearly
impossible.
If
the
financial
barrier
were
to
be
overcome,
whether
through
foreign
direct
investment
or
a
gift,
the
outcome
could
be
largely
the
same
as
is
projected
for
Turkey.
By
investing
heavily
in
human
capital,
the
Middle
East
could
also
accelerate
its
growth
and
move
closer
towards
economic
development.
17
Yemen’s
GDP
per
capita
is
1.4%
of
Qatar’s
(Middle
East:
GDP
per
Capita).

24. 24
Conclusion
Contrary
to
various
organizational
bodies
focused
on
growth
and
development,
Turkey
is
not
a
developed
country;
rather
it
is
on
a
path
toward
development.
Using
the
Solow
(1956)
model,
development
was
original
defined
as
the
point
at
which
capital
replacement
needs
of
an
economy
are
directly
met
by
their
capital-­‐labor
ratio
as
it
relates
to
output.
With
help
from
Phillips
(1958)
and
Stiglitz
(1974),
the
idea
of
a
policy-­‐determined
steady
state
was
introduced.
Instead
of
pursuing
a
theoretical
state
dependent
upon
unrealistic
assumptions,
countries
have
the
ability
to
determine
and
achieve
development
set
by
domestic
policies
related
to
labor,
capital
and
output.
By
eliminating
these
assumptions,
development
is
now
considered
achievable
in
theory
as
well
as
practice.
Looking
back
at
a
history
of
Turkey,
it
has
faced
a
series
of
growth
cycles
due
to
previously
implemented
growth-­‐oriented
policies.
More
specifically,
the
country
missed
out
on
massive
growth
potential
by
remaining
in
a
protectionist
state
as
well
as
the
slow
implementation
of
financial
liberalization
tactics.
To
address
the
former,
a
case
study
of
Turkish
vs.
Korean
trade
policies
in
the
middle
to
late
twentieth
century
was
examined
to
find
a
reason
for
their
differing
levels
of
growth
(Yilmaz
2002).
Though
Turkey
began
the
timeframe
with
a
much
stronger
economy,
the
Koreans
quickly
passed
the
Turks
using
their
newly
liberalized
trade.
Now,
Korea
is
one
the
world’s
most
successful
exporters,
and
as
such,
their
country
has
flourished
on
the
global
stage.
In
comparison,
Turkey
stuck
with
protectionism
and
therefore
saw
only
incremental
growth
during
the
ascension
of
Korea,
namely
because
of
their
refusal
to
engage
in
the
innovative
idea
sharing
called
globalization.

25. 25
As
for
financial
liberalization,
Turkey
had
the
correct
policy
prescription,
but
the
timing
and
implementation
resulted
in
their
downfall
(Özatay
and
Sak
2002).
Not
only
did
they
attempt
to
liberalize
at
the
height
of
a
global
stagflation,
increasing
the
riskiness
of
bank
lending
causing
banks
to
reduce
the
credit
supply,
but
it
also
took
them
until
the
next
major
financial
crisis
to
get
it
right.
As
a
result,
Turkey
saw
slower-­‐than-­‐expected
growth
and
required
stabilization
from
the
IMF
to
get
back
to
a
relatively
sound
macroeconomic
position
(Altug
et.
al.
2008).
If
both
liberalization
policies
had
been
implemented
appropriately,
they
would
have
resulted
in
significant
growth
in
Turkey
(Kar
et.
al.
2008).
Instead,
they
floundered
in
the
wake
of
two
major
economic
crises
and
arguably
came
out
of
the
latter
worse
off
than
they
began.
Moving
forward,
Turkey
will
need
to
learn
from
its
previous
mistakes
as
well
as
apply
new
theory
if
it
wishes
to
get
back
on
the
path
toward
economic
development.
By
introducing
the
Human
Development
Index,
a
measure
of
development
that
focuses
on
human
wellbeing
over
classic
GDP
growth,
the
definition
of
development
in
the
context
of
this
paper
evolved
once
more;
that
is:
development
as
the
end
result
of
growth
aimed
at
increasing
the
quality
of
civilian
life
through
attaining
a
country’s
policy-­‐determined
steady
state.
The
main
focus
of
Turkey’s
growth
moving
toward
economic
development
should
be
on
human
capital
investments
through
a
loosening
of
fiscal
policy.
It
has
been
shown
that
investments
in
human
capital
in
the
export
sector
increase
the
ratio
of
exports
to
GDP
(Levin
&
Raut
1997).
The
investment
in
human
capital
will
also
show
increasing
returns
to
scale
because
of
its
effects
on
all
of
the
inputs
into

26. 26
the
HDI.
These
investments
will
increase
knowledge
by
providing
a
higher
quality
of
education,
thereby
increasing
productivity
and
ultimately
export
growth.
There
is
also
a
relationship
between
export
growth
and
domestic
savings
(Yilmaz
2002),
which
aligns
with
assumptions
in
the
Harrod-­‐Domar
(1939;
1946)
and
Solow
(1956)
models.
The
savings
could
be
put
towards
public
health
investments,
increasing
the
average
life
expectancy
in
the
country.
By
comparison
to
Asian
Tiger
economies
such
as
Korea,
increasing
a
country’s
share
of
exports
relative
to
GDP,
thus
adopting
an
outward-­‐focused
growth
policy,
has
the
capabilities
to
accelerate
growth,
which
would
increase
living
standards.
Putting
these
ideas
together,
Yilmaz
writes,
“The
success
story
of
Korea
demonstrates
the
importance
of
a
government’s
export
push
policy
and
ability
to
foresee
a
major
trend
coordinate
with
complementary
investments
for
education
and
vocational
training
together”
(2002,
p.
75).
An
interesting
addition
to
this
piece
is
that
of
vocational
training,
which
has
yet
to
be
previously
discussed.
By
investing
in
specific
trade
schools,
the
time
lag
for
new
skilled
labor
enters
the
workforce
will
decrease,
providing
the
economy
with
a
preliminary
boost
while
school-­‐aged
children
continue
their
development
in
primary
and
secondary
schools.
The
reforms
themselves
do
not
seem
to
have
any
controversial
measures
associated
with
them
that
would
make
it
infeasible
to
uniformly
roll
out
to
the
Middle
Eastern
region,
therefore
the
benefits
of
human
capital
investment
should
be
able
to
affect
more
economies
than
just
Turkey.
In
order
to
fund
this
educational
reform,
fiscal
policies
will
need
to
be
loosened
and
government
funds
will
have
to
flow
toward
schools.
However,
much
like
previous
policy
implementations,
the
timing
is
not
right.
Here,
Turkey
will
need

27. 27
to
show
self-­‐restraint
and
learn
from
its
past.
If
they
were
to
loosen
fiscal
policy
now,
there
is
a
strong
likelihood
that
government
deficit
and
inflation
would
continue
growing
beyond
their
current
levels,
putting
their
entire
economic
stability
at
risk.
Instead,
they
should
continue
to
focus
on
reducing
their
deficit
and
deflating
prices.
Turkey
has
the
ability
to
be
a
role
model
in
the
Middle
East
as
one
of
the
first
countries
to
achieve
development.
Given
its
history,
the
country
should
be
able
to
grow
carefully
and
avoid
pitfalls
along
the
way.
Though
immediate
growth
and
subsequent
development
would
be
the
ideal
case,
it
is
important
to
recognize
that
development
in
a
long-­‐run
goal.
Therefore,
all
policies
should
be
evaluated
thoroughly
for
content,
implementation,
and
timing
before
implementation
within
the
country
and/or
region.

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