After the 2001 crisis, Turkey continued to pursue a radical market-oriented reform strategy that followed the philosophy of the Washington Consensus. By the early 2000s the government had already liberalised the capital account, privatised many banks and enterprises, and kick-started the processes of financialisation. The government had also withdrawn from redistribution and social justice policies. Gross domestic product (GDP) growth in the post-2001 period was relatively high, but it was a “jobless” growth caused by substantial productivity increases generated largely by intensifying the work process rather than by technological advancements. Today, Turkey is still characterised as a country with very high income inequality. The economic growth in the post-2001 period benefited the society very unequally. This type of growth regime harbours great economic risks and is socially unjust. The development of Turkey is vulnerable thanks to the high current account deficit, high currency mismatch particularly in the enterprise sector, high income inequality, high unemployment, and an unsatisfactory development of the industrial sector despite some limited successes. We recommend a new development regime with selective capital controls, a balanced current account, an active industrial policy by the government, stronger unions and employer associations combined with coordinated wage bargaining on the sectoral level, and, last but not least, redistributive policies aiming to achieve a more equal income distribution.
economic development economic policy economic conditions trend Turkey