The Turkish economy experienced two distinct periods of structural change: before and after 1980. Turkey was mired in import-substitution industrialization policies prior to 1980. Domestic production replaced imported durable consumer and capital goods, resulting in the revival of domestic demand and the transformation of the Turkish economy from agrarian to industrial. In the post-1980 period, the Turkish economy experienced another massive sea change. Turkey passed from an inward-oriented and import-substituting structure to an outward- and export-oriented one. This transformation began in accordance with the International Monetary Fund’s (IMF) and World Bank’s structural adjustment policies (WB). In the early 1980s, Turkey’s economy opened to foreign markets and liberalized its trade regime. In 1989/1990, removing barriers to financial inflows was a critical component in promoting financial liberalization. Thus, the liberalization process of the Turkish economy had completed in the 1990s. Domestic demand was suppressed during this period, and policies of subsidies and incentives were implemented to attract external demand. Concurrently, a high-interest policy had been pursued in order to encourage capital inflows and stabilize exchange rates. As a result of these policies, the Turkish economy has shifted toward services and become much more reliant on foreign capital inflows. Furthermore, the services sector’s value-added increased rapidly during this period. The Turkish economy, on the other hand, had become vulnerable to crises. The Turkish economy was hit by five different crises, namely in 1994, 1998/1999, 2001, and 2008, resulting in negative growth. Because of these economic fluctuations, the Turkish economy has remained unstable. Until 2015, the main dynamic driving economic growth was final domestic demand. However, it experienced the most significant decline from 2001 to 2008. Domestic demand should be deepened by policies aimed at increasing income, demand, product diversity, and reducing poverty. Selective microeconomic policies should be used to upgrade industries and technologies, reducing the negative effects of external shocks and assisting in the creation of a more resilient macroeconomic structure.


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Maya Moalla

I am a forest engineer (KTÜ). I completed my master's degree and PhD. in economics at Mersin University. I am interested in economic growth and development. Looking for academic positions.

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