Turkey’s role of the state in the economy
The Ottoman Empire had a strong tradition of government direction of the economy. Ottoman economic theory of state control to the right and the duty of the economy for the benefit of all due. The state controls a large part of the country and suppressed power centers, blocks the development of a landed aristocracy. A position in the imperial hierarchy was the most important determinant of income. Confiscated because the Sultan’s officials wealth when they died could be passed only by state funds education. For example, the candidates were required for the positions in the bureaucracy to have command of the Ottoman language. Craftsmen and also claimed, and the protection given by the state, often at the expense of economic modernization. The bureaucracy had little interest in flying economic growth, the rise of a new class that could put their dominance into question. To ensure that the review of certain urban-based manufacturing and service capabilities were, they reserved for minorities.
Republican Turkey inherited attitudes and memories of the Ottomans, which play an important role in the political economy of the country continued in the late twentieth century. Republican leaders believe that the state is obliged to intervene in the economy, not only to strengthen the nation against foreign intervention, but ultimately more about the welfare of the people.
Liberal Interlude
Scientists have traditionally been the importance of state intervention in the economy was emphasized in the early years of the Republic, but recent research has shown that the Turkish economic policy was relatively liberal to the 1930s. The government made significant investments in rail and other infrastructure projects, but encouraged the law to promote the industry by 1927, and other activities of the private sector. In addition, the Turkish economy was relatively open to the international markets during the 1920s. Under the provisions of the Treaty of Lausanne of 1923, the capitulations were abolished, but Turkey not imagine protective tariffs until August 1929. As a result, prices remained low, and the Turkish lira was convertible and floating. to initiate foreign interests in public and private companies in support of industrial development investment. In these early years, economic growth was satisfactory, but the country was the chronic trade deficits, despite the continuing devaluation of the lira.
Turkish economic development reached a watershed with the Great Depression. was broken in 1930 on foreign markets for agricultural products, Turkish, what sharp declines in prices for agricultural goods and a corresponding decline in national income. Dissatisfied with the slow development of the industry began, the leadership of Turkey for alternative strategies.During the late 1920s and early 1930s, economic and political thinkers discussed to seek alternative approaches to economic development. The interventionist trend in Western economic thought, through works such as John Maynard Keynes’ The End of Laissez-Faire (1926), represented influences the theoretical debate. The apparent success of the Soviet Union by car to heavy industry in its first Five-Year Plan (1928-1933) impressed to develop Turkish thinkers, although the end of Turkish politics borrowed primarily from the West.
Statism
In its 1931 Congress passed the Republican People’s Party (Cumhuriyet Halk Partisi – CHP) statism, one of the six arrows Atatürk, as the official economic strategy. As part of this program, individual companies, a fundamental role in the business world, but active government intervention was for the good of the nation and the state to promote prosperity. The CHP also stated that statism was a middle way between capitalism and socialism. to sequence, in practice, promoting the industrialization of statism by the five-year plans and the creation of public companies. Comprehensive protective tariffs were also introduced during the 1930s, a pattern of import substitution industrialization that would continue for many years.
After the Second World War made all the major parties supports statism. The sharp re-orientation of economic policy of Turkey after 1980 included a rejection of the much-statist doctrine, which is still influenced Turkish economic thought. As Atatürk had could be said that once Turkey was a satisfactory level of development of certain state-owned enterprises will be returned to private control is achieved, could the post-1980 economic reforms as a continuation of one aspect of the original program are statist. In addition, sets the government’s policy instruments such as the SEEs and development planning, which formed during the time of use statist. But by the mid-1990s, the deepening debt dictated a faster reduction of state economic obligations. Given the high inflation in Turkey, job insecurity and unemployment could statism in vogue again, but in the mid-1990s, no major opposition party for the wholesale re-nationalization of the economy was required. .
State economic enterprises and privatization
An important instrument of statism in order to further government economic policy, state economic enterprises (SEEs) organized differently, but the government holds at least 50 percent of the shares in each of them. Where are the set by the government, and each has a Board of Directors reflects the property to see where, in particular the combination of government representatives, directly to the company with private interests. While setting the campaign statist industrialization of the 1930s, making the government of many industrial SEEs.Investing in the mid-1990s, to continue to sectors of national importance or sectors in which private investors were reluctant because capital requirements are too large in light of the expectedYields have dominated. SEEs include national transportation, communications, energy and enterprise; banks that own companies in certain industries such as textiles or refining and conglomerates with interests in many areas. Some SEEs control in companies, is shared ownership with private and foreign investors. In 1964, the State Investment Bank was created to provide long-term loans for investment SWU. Credits from the Central Bank of Turkey, transfers from the treasury and capital markets to finance SEEs.
In the mid-1990s, SEEs accounted for more than 40 percent of value added in manufacturing, and employs approximately 550,000 employees, or about 20 percent of industrial workers.established until 1980 SWU prices in accordance with instructions from the government, but after the introduction of the reform package this year was expected that the prices set independently. However, the prices of some key commodities such as fertilizers continue, as defined by the government. Where an impact on markets, particularly for agricultural products by establishing guaranteed minimum prices for raw materials.
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