The Political Economy of Turkey: Debt, Adjustment and Sustainability

289 Pages·1990·28.43 MB·English

by  Tosun Aricanli

THE POLmCAL ECONOMY OF TURKEY
The Political Economy
of Turkey
Debt, Adjustment and Sustainability
TOSUN ARICANLI
Assistant Professor of Economics
and
DANIRODRIK
Assistant Professor of Public Policy
both at John F. Kennedy School of Government
Harvard University
Palgrave Macmillan
ISBN 978-1-349-11276-0 ISBN 978-1-349-11274-6 (eBook)
DOI 10.1007/978-1-349-11274-6
Tosun Aricanli and Dani Rodrik 1990
Softcover reprint of the hardcover 1st edition 1990 978-0-333-51545-7
All rights reserved. For information, write:
Scholarly and Reference Division,
SL Martin's Press, Inc., 175 Fifth Avenue,
New York, N.Y. 10010
First published in the United States of America in 1990
ISBN 978-0-312-03596-9
Library of Congress Cataloging-in-Publication Data
The Political Economy of Turkey: debt, adjustment and sustainability
[edited by] Tosun Aricanli and Dani Rodrik.
p. em.
ISBN 978-0-312-03596-9
1. Turkey-Economic policy. 2. Debts, External-Turkey.
I. Aricanli, Ali Tosun, 1947-. U. Rodrik, Dani.
HC482.P68 1990
338.9561---dc20 89-34980
CIP
Contents
List of Figures vii
List of Tables VIU
Acknowledgements xi
Notes on the Contributors xii
Introduction and Overview
Tosun Arzcanlz and Dani Rodrik 1
1 Turkey's Trade Liberalization in the 1980s and Prospects
for its Sustainability
Tercan Baysan and Charles Blitzer 9
2 Fiscal Aspects of Adjustment in the 1980s
Merih Celdsun 37
3 An Assessment of the Pattern of Turkish Manufactured
Export Growth in the 1980s and its Prospects
Fikret Senses 60
4 The Record on Private Investment in Turkey
Patrick Conway 78
5 Financial System and Policies in Turkey in the 1980s
Yzlmaz Akyuz 98
6 The Private Sector's Response to Financial Liberalization in
Turkey: 1980-82
Izak Atiyas 132
7 External Balance and Growth in Turkey: Can They Be
Reconciled?
Ritu Anand, Ajay Chhibber and Sweder van Wijnbergen 157
8 Some Policy Dilemmas in Turkish Macroeconomic
Management
Dani Rodrik 183
v
vi Contents
9 Inter-Class and Intra-Class Relations of Distribution Under
'Structural Adjustment': Turkey During the 1980s
Korkut Boratav 199
10 The Political Economy of Turkey's External Debt: The
Bearing of Exogenous Factors
Tosun Ancanlz 230
11 Turkish Debt and Conditionality in Historical Perspective:
A Comparison of the 1980s with the 1860s
Emine Kzray 254
12 Turkish Experience: Summary and Comparative Notes
Lance Taylor 269
Index 276
List of Figures
4.1 Real Private Investment Growth 83
4.2 Real Public Investment Growth 83
4.3 Turkey: Housing as a Share of Private Investment 84
5.1 The Lorenz Curve of the Distribution of Household Time
Deposits, 1985 124
7.1 Fiscal Deficits, Real Output Growth and Real Interest
Rates for Given Current Account Targets 161
7.2 Public Savings Rate, 1967-87 166
7.3 The Effect of Changes in Fiscal Deficit on Interest Rates
and Output Growth (A and B) 170
10.1 Migration and Change in Insured Employment 233
10.2 Growth of National Labor Force, Unemployment
and Migration 236
10.3 Growth in Insured and Uninsured Employment in the
1970s 238
10.4 US Military and Economic Aid to Turkey (Grants and
Loans) 235
10.5 Destination of Exports 248
vii
List of Tables
1.1 Real Exchange Rate, 1979-87 12
1.2 Export Incentives, 1980--86 14
1.3 Turkey's Import Regime in the 1980s 16
1.4 1984 Changes in Protection 18
1.5 Changes in Nominal Tariff Protection, 1983--84 20
1.6 Export Performance, 1979-86 26
1.7 Imports, 1979-86 28
1.8 Balance of Payments and External Debt Burden
Indicators, 1980--86 30
2.1 Macroeconomic Balances and Public Sector, 1976--87 44
2.2 Fiscal Aggregates, 1978-87 46
2.3 Public Sector Borrowing Requirement (PSBR), 1980--87 48
2.4 Money, Domestic Credit and Public Sector 49
2.5 Structural Change in Public Revenue, Savings and
Investment, 1979-87 51
2.6 Selected SEE Prices and Indicators 54
2.7 EBF Levies and Import Protection, 1985 55
2.8 Indicators of Public Debt, 1981-87 56
3.1 Manufactured Exports, 1963--87 63
3.2 Share of Three Most Important Product Categories in
Total Manufactured Exports, 1974-87 64
3.3 Share of Middle Eastern Countries in Manufactured
Exports by Major Category, 1978-87 66
3.4 Factor Content of Manufactured Exports by
Destination, 1984 and 1987 67
Al Value Added per Employee and Factor Content
Distribution of Exports by Manufacturing Activity 76
4.1 Growth in Turkish Real Private Investment and Related
Indicators 85
4.2 Impulse Response Functions from V AR Regressions 90
4.3 Average Growth Rates of Components of Private
Investment 91
4.4 Impulse Response Functions: Real Private Investment 92
Al Contemporaneous Correlation Coefficients: Aggregate
Private Investment V AR 97
A2 Vector Autoregression in lpt 97
5.1 Commercial Bank Interest Rates, 1980--86 100
5.2 Real After-Tax Rates of Return, 1979-86 101
5.3 Percentage Distribution of Time Deposits, 1979-86 101
5.4 Indicators of Financial Deepening, 1979-86 105
viii
List of Tables ix
5.5 Financial Assets - New'lssues, 1979-86 106
5.6 Composition of the Stock of Financial Assets, 1979-86 107
5.7 Household Portfolios, 1978-85 107
5.8 Distribution of Bank Credits, 1979-86 108
5.9 Net New Issues by Sectors, 1979-86 109
5.10 Credit Costs and Interest Spreads 112
5.11 Sectoral Allocation of Credits by the Banking System,
1979-86 115
5.12 Corporate Sector: Distribution of Sale Revenues,
1978-86 116
5.13 Financial Indicators for Non-Financial Corporations,
1978-86 117
5.14 Savings Ratios 125
6.1 Ex-Post Real Deposit Interest Rates 138
6.2 Annual Rates of Inflation 138
6.3 Statistics on Private Commercial Banks 139
6.4 Indicators of Financial Deepening 140
6.5 Assets of the Banking System 141
6.6 Private Sector's Share in Total Credit 142
6.7 Annual Non-Weighted Averages of Financial Ratios 148
6.8 ANOVA Results 149
7.1 Measures of the Overall Debt Burden 158
7.2 Key Macroeconomic Indicators 165
7.3 Allowable Foreign Borrowing: Sustainable Current
Account Deficits 173
7.4 Fiscal Implications of Output Growth 177
8.1 Macroeconomic Performance in Comparative
Perspective 185
8.2 Principal Debt Indicators 187
8.3 Composition of the Stock of Financial Assets 193
9.1 The 'Social Matrix' for Analysing Relations of
Distribution in Turkey 203
9.2 Marketing Channels, Agents and Pricing Behavior in
the Turkish Economy 205
9.3 Wage Indicators, 1976-86 207
9.4 Mark-up Rates and Real Wages in Manufacturing
Industry 208
9.5 Hourly Wages in Dollar Terms and Labor Productivity
Comparisons in Manufacturing Industries 209
9.6 Terms of Trade and Commercial Margins for
Agriculture 213
9.7 Price and Output Effects on Per Capita Farmer Incomes 214
9.8A Relative Magnitude of Support Purchases and Relative
Support Prices (Wholesale) 216
X List of Tables
9.8B Relative Support Prices {Agricultural) 216
9.9 Indicators on Internal Division of the Surplus 220
10.1 Exogenous Factors of Major Significance for the
Performance of the Turkish Economy 231