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Capital Flows and the External Financing of Turkey's Imports (Special Series on Mixed Credits, in Collaboration with ICEPS)

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  • Ziya Önis
  • Süleyman Özmucur

Abstract

Subsidized capital flows have made a major contribution to the recovery of the Turkish economy from the acute balance of payments crisis of the late 1970s. The inflow of foreign capital on a substantial scale has facilitated rapid growth in imports of essential raw materials and investment goods which, in turn, has been instrumental in sustaining a comparatively high rate of economic growth. A balanced account, however, needs to take into consideration the negative side effects associated with subsidized credits. Subsidized capital inflows have resulted in overborrowing and consequently in overexpansion of the public sector, particularly during the post-1984 phase. A structural disequilibrium has developed, in the sense that the majority of medium- and long-term capital inflows has been directed to the public sector, and within the public sector, primarily to infrastructure projects. The private sector has been able to borrow mainly on a short-term basis, to satisfy working ... Les flux de capitaux subventionnés ont puissamment contribué à la restauration de l'économie turque confrontée à une crise aiguë de la balance des paiements à la fin des années 70. L'afflux, à grande échelle, de capitaux étrangers a concouru à la croissance accélérée des importations de matières premières essentielles et de biens d'investissements qui, à leur tour, ont été à la base d'un taux de croissance économique relativement élevé. Un bilan équilibré implique cependant la prise en considération des effets négatifs de ces crédits bonifiés. Les flux de capitaux subventionnés ont donné lieu à un surendettement et à une expansion excessive du secteur public, en particulier après 1984. Un déséquilibre structurel s'est alors développé, la majorité des importations de capitaux à long et à moyen termes bénéficiant au secteur public et, au sein de ce secteur, prioritairement aux projets d'infrastructures. Quant au secteur privé, il a emprunté surtout à court terme pour s'assurer ...

Suggested Citation

  • Ziya Önis & Süleyman Özmucur, 1991. "Capital Flows and the External Financing of Turkey's Imports (Special Series on Mixed Credits, in Collaboration with ICEPS)," OECD Development Centre Working Papers 36, OECD Publishing.
  • Handle: RePEc:oec:devaaa:36-en
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    File URL: http://dx.doi.org/10.1787/428522687883
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    References listed on IDEAS

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    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
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    3. Jeffrey D. Sachs, 1989. "Developing Country Debt and Economic Performance. The International Financial System," NBER Chapters,in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages -12 National Bureau of Economic Research, Inc.
    4. Alain Ize & Guillermo Ortiz, 1987. "Fiscal Rigidities, Public Debt, and Capital Flight," IMF Staff Papers, Palgrave Macmillan, vol. 34(2), pages 311-332, June.
    5. Jeffrey D. Sachs, 1989. "Introduction to "Developing Country Debt and the World Economy"," NBER Chapters,in: Developing Country Debt and the World Economy, pages 1-34 National Bureau of Economic Research, Inc.
    6. Jeffrey D. Sachs, 1989. "Developing Country Debt and the World Economy," NBER Books, National Bureau of Economic Research, Inc, number sach89-3.
    7. Philippe Callier, 1989. "Debt Relief and Adjustment Incentives in a Financially Open Economy: Comment on Corden," IMF Staff Papers, Palgrave Macmillan, vol. 36(2), pages 514-522, June.
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