Turkey's aborted attempt at export-led growth strategy

Turkish economic history is full of ups and downs.Although mired with financial crises in the 1990s and early 2000s, its economic problems generally stemmed from foreign exchange shortages.Adopting an import substituting industrialization strategy in most of the post-World War II period, the country, like its counterparts in Latin America, was immersed into an economic environment with unsustainable foreign account deficits.This major constraint on the fortunes of the Turkish economy disappeared in the early 1980s when the Turkish government asked Turgut O ̈zal, a powerful technocrat at that time, to design and implement a wideranging economic reform package.The reform measures, announced on 24 January 1980, were not fundamentally different from those initiated earlier in 1958 and 1970.Yet, this time, contrary to the previous episodes, the reform measures remained in place and relegated Turkey's foreign exchange problem to the shelves of economic history.There are ample accounts of the 1980 Turkish economic reform programme. 1What is missing from the literature, however, is a full account of the earlier economic reform episodes in 1958 and 1970, especially with a view to interpreting why these reform measures had been reversed within a few years after their introduction.This void is even more significant for the 1970 reform episode in the face of strong evidence that the initial response of the economy to the reform measures was spectacular.Despite the better than expected initial outcome, the 1970 reform package was gradually abandoned by the government(s) -marking the beginning of the economic and political 'dark age' of Turkey in the second half of the 1970s.This article attempts to analyse the dynamics of the 1970 Turkish economic (trade) reform episode with the aim of interpreting why it was abandoned by the mid-1970s.Decades of import substitution policies in Turkey, although occasionally interrupted, had resulted in a political economy in which profits were made by manipulating behaviour rather than production for the market (domestic or international).State intervention generated economic rents, and economic interest groups attempted to maximize their shares both by influencing state policies and by competing with one another.Areas of conflict and congruence among the interest groups during the 1970s included issues of foreign trade: exchange rate policy, import protectionism, and the foreign exchange supply

Development economics · Economic policy · Economic reform · Economic shortage · Economics · Foreign exchange · International economics · Monetary economics · Political science · Politics · Turkish · International Development and Aid · Law · Natural Resources and Economic Development

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