Some Policy Dilemmas In Turkish Macroeconomic Management
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.
KeywordsReal Exchange Rate Debt Crisis Foreign Asset Debt Service Foreign Debt
Unable to display preview. Download preview PDF.
- Celâsun, M. and D. Rodrik (forthcoming) Debt, Adjustment and Growth: Turkey.Google Scholar
- IMF (various years) International Financial Statistics (Washington DC: International Monetary Fund).Google Scholar
- IMF (1987) World Economic Outlook April (Washington DC: International Monetary Fund).Google Scholar
- Kumcu, E. (1988) ‘Economic Liberalization and Changing Structure of Foreign Trade’, photocopy.Google Scholar
- Leeds, R. (1988) ‘Turkey: Implementation of a Privatization Strategy’, in R. Vernon (ed.), The Promise of Privatization: The Challenge for American Foreign Policy, (New York: Council on Foreign Relations) pp. 149–78.Google Scholar
- OECD (1987) Economic Surveys: Turkey June (Paris: Organization for Economic Co-operation and Development).Google Scholar
- Rodrik, D. (1988a) ‘External Debt and Economic Performance in Turkey’, in T. Nas and M. Odekon (eds), Liberalization and the Turkish Economy (New York: Greenwood Press) pp. 161–83.Google Scholar
- Saracoglu, R. (1987) Economic Stabilization and Structural Adjustment: The Case of Turkey’, paper presented at the World Bank-IMF Symposium on Growth-Adjustment Programs, 25–27 February, Washington, DC.Google Scholar
- Vernon, R. (1987) ‘Economic Aspects of Privatization Programs’ (The Economic Development Institute Washington DC: World Bank).Google Scholar
- World Bank (1987) Fiscal Policy and Tax Reform in Turkey (Washington DC).Google Scholar