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High-Quality Versus Low-Quality Growth in Turkey - Causes and Consequences

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  • Acemoglu, Daron
  • Üçer, Murat

Abstract

Turkey's economy has made important strides in the 17 years since the financial crisis of 2001, averaging an annual growth rate of about 5.7%. But the quality of this growth has been poor, especially since 2007, with little-to-no productivity growth, limited technological upgrading, substantial (mis)allocation of resources to the construction sector and a huge surge in credit. This growth has also been generally unequal. This low-quality, unequal growth has been in the context of worsening economic institutions, underpinned by deteriorating political institutions. This paper attempts to understand the causes and consequences of low-quality growth in Turkey, briefly interrupted by a period of higher-quality growth between 2002 and 2006. The main thesis of our paper is that the lack of high-quality, shared growth in Turkey is rooted in the nature and evolution of its economic institutions, which are themselves closely linked to the country's political institutions. The short episode of high-quality and more equally shared growth came as a result of institutional improvements, but duly disappeared as these institutional gains were reversed.

Suggested Citation

  • Acemoglu, Daron & Üçer, Murat, 2019. "High-Quality Versus Low-Quality Growth in Turkey - Causes and Consequences," CEPR Discussion Papers 14070, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:14070
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    More about this item

    Keywords

    economic growth; emerging markets; high-quality growth; institutions; productivity; shared prosperity; Turkey;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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