Beyond Planning and Liberalization: Foreign Trade and Industrial Development in Turkey

Abstract

After a brief open-economy experience during the 1920s, the Turkish economy could be regarded as state-controlled, planned, and partially closed for the following half a century. Trade, meanwhile, played a limited role and, aside from imported raw materials and exports of agricultural products, did not constitute a significant portion of economic activity. Industry developed – though limited – under a strategy of import substitution in 1960s and 1970s. Along with other major developing countries, Turkey has also witnessed a period of commercial and financial openness, export-oriented industrial production, and a growth model that led to high growth rates, increasing indebtedness at the state level, and budget and current account deficits in the 1980s. Political and macroeconomic instability for the whole 1990s led to unsteady growth cycles under unfinished industrialization and unregulated liberalization processes.