Some Policy Dilemmas In Turkish Macroeconomic Management

  • Dani Rodrik


It has been more than eight years since the Turkish economy first embarked on a strategy of outward orientation. The Özal era has been characterized by reforms, quite radical by Turkish standards, aimed at eliminating once and for all the macroeconomic stop-go cycles and associated balance-of-payments crises to which the Turkish economy had been prone in the previous three decades. In its broad outlines, Özal’s program has undeniably been successful in extricating the economy from the depths of a debt crisis (in 1978–80) and in re-igniting economic growth. Yet, it is hard to avoid the feeling that the light at the end of tunnel recedes almost as fast as the Özal engine advances: inflation remains untamed, debt service exerts a growing pressure on public finances and real wages continue on their downward trend. In late 1988, the annual inflation rate stood close to 100 per cent, and the public-sector deficit around 8 per cent of GNP. This has led to two sets of equally plausible responses. The critics warn about a debt crisis around the corner; the sympathizers worry that the international financial community does not appreciate enough the adjustment already undertaken.


Real Exchange Rate Debt Crisis Foreign Asset Debt Service Foreign Debt 
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Copyright information

© Tosun Arıcanlı and Dani Rodrik 1990

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  • Dani Rodrik

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