Turkey Has The Earmarks Of A New TigerGene Koretz
Over the past decade, Turkey has been the fastest-growing member of the Organization for Economic Cooperation & Development, averaging better than a 5% annual rate. What's more, says Columbia University economist Dani Rodrik, it has the potential of emulating the even faster growth of the East Asian Tigers in the future.
In a recent issue of International Economic Insights, published by the Institute for International Economics, Rodrik notes that only a dozen years ago, a bankrupt Turkish economy was wracked by triple-digit inflation and shortages of basic commodities. But economic reforms in the 1980s, including financial deregulation and reduced controls on imports and currency convertibility, turned the economy around.
From less than $3 billion in 1980, Turkey's merchandise exports soared to $15 billion in 1992, with manufactured goods ranging from clothing to steel accounting for 80% of the total. Although imports hit $23 billion last year, much of the gap has been made up by rising tourism receipts and money sent home by Turkish workers abroad. Aided by heavy capital inflows, investment has flourished, exceeding 22% of gross domestic product for six straight years.
To achieve sustained faster growth, Rodrik warns, Turkey will have to curtail its reliance on heavy government deficit spending and quell inflation that has averaged 60% to 70% a year for half a decade. If it can find the political will to take such painful steps, he says, its future seems assured. Turkey's entrepreneurial zeal, diversified export-oriented economy, and strategic position linking Europe, the Middle East, and former Soviet Central Asian republics all suggest that it is "an economic miracle waiting to happen."