The Turkish economy
Turkey is a highly populated country with a signiﬁcant industrial and agricultural potential. Although the country was devastated during World War I and the war of independence, it came a long way in its economic achievements during the republican period. The elite that founded the state, similar to other late-developers embarked on an ambitious programme for development. Again, in a fashion similar to what occurred in many developing countries at that stage, the state was going to assume the leading role in this process. Thus, Turkey became one of the ﬁrst countries in the Middle East that followed a state-led, import-substitution industrialisation policy until 1980. With the economic liberalisation measures of 1980, the country adopted the principles of a neo-liberal market economy. Initially, the liberalisation programme was praised as a success story for turning an inwardlooking economy to an outward-looking, export-oriented one. However, by the end of the decade macroeconomic imbalances became significant, leading the country into two severe economic crises during the 1990s. This led some analysts to call the 1990s ‘a lost decade’ for Turkey.1 The roots of the crises are often attributed to the economic liberalisation programme and the timing of certain aspects of it.2 Circles of macroeconomic imbalance, crisis, reform, recovery and again a macroeconomic imbalance seem to mark the characteristic of the last two decades of the Turkish economy.3 Since the economic crisis of 2001, Turkey has adopted an IMF-oriented reform programme to bring the country out of this circle.
Turkey had an agriculture-dominated economy by the end of the Second World War. As can be seen from Table 3.1 below, the share of agriculture in the Gross National Product (GNP) was 46 per cent in 1946, while the share of manufacturing remained 13 per cent. The labour force was predominantly occupied in the agricultural sector (77 per cent), while the share of urban population as a whole remained 18 per cent.