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Regulatory Reforms to Unlock Long–Term Growth in Turkey

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  • Rauf Gönenç

    (OECD)

  • Łukasz Rawdanowicz

    (OECD)

Abstract

In the 2000s, Turkey has enjoyed rapid catching–up. This was possible despite the adverse business environment, as the semi–formal and informal economy had a significant contribution to the expansion of the private sector. Productivity growth was strong, but labour utilisation remained very low. Looking forward, higher employment and productivity growth will not be possible without profound regulatory reforms of minimum wages, severance payments, social security contributions and flexible job contracts. These reforms have been discussed for a long time, but political obstacles prevented implementing them. Resolving this deadlock calls for advancing an integrated strategy of labour reforms and formalisation via experimenting with new regulation on the voluntary basis to identify the most successful solutions that can be later rolled out to the whole economy. Moreover, Turkey has to ease further anti–competitive product market regulations by reducing barriers to entrepreneurship and foreign direct investment, and by limiting government involvement in business. A successful implementation of these reforms would allow Turkey to enjoy golden decades. This paper relates to the 2010 OECD Economic Review of Turkey (www.oecd.org/eco/surveys/turkey). Réformer les réglementations pour débloquer la croissance à long-terme de la Turquie Dans les années 2000 la Turquie a réalisé un rattrapage rapide. Cela a été possible malgré un cadre réglementaire défavorable, grâce à des activités semi-formelles et informelles qui ont considérablement contribué à l'expansion du secteur privé. La croissance de la productivité a été forte, mais l'utilisation du travail reste très faible. A l'avenir l'emploi et la productivité ne pourront pas croitre plus vite sans de profondes réformes du salaire minimum, des indemnités de licenciement, des cotisations de sécurité sociale et des contrats de travail flexibles. Ces réformes ont été discutées depuis longtemps mais des obstacles politiques ont empêché leur mise en oeuvre. Pour dépasser ce blocage, une stratégie intégrée de réformes du marché du travail et de formalisation est nécessaire, via l'expérimentation de nouvelles règlementations sur la base du volontariat, afin d'identifier de meilleures solutions qui peuvent être progressivement étendues à l'ensemble de l'économie. En outre, la Turquie devrait réduire les réglementations anti-concurrentielles dans les marchés de produits en diminuant les obstacles à l'entreprenariat et à l'investissement étranger direct, et en restreignant l?intervention du gouvernement dans les affaires. La mise en oeuvre réussie de ces réformes permettrait à la Turquie de bénéficier de brillantes décennies de croissance. Ce document se rapporte à l’Étude économique de Turquie de l’OCDE, 2010 (www.oecd.org/eco/etudes/turquie).

Suggested Citation

  • Rauf Gönenç & Łukasz Rawdanowicz, 2010. "Regulatory Reforms to Unlock Long–Term Growth in Turkey," OECD Economics Department Working Papers 821, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:821-en
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    File URL: http://dx.doi.org/10.1787/5km36j6w9bzq-en
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    References listed on IDEAS

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    1. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters,in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth Princeton University Press.
    2. Martin Schindler, 2009. "The Italian Labor Market; Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund.
    3. Aidt, Toke & Jayasri Dutta, 2002. "Policy compromises: corruption and regulation in a dynamic democracy," Royal Economic Society Annual Conference 2002 1, Royal Economic Society.
    4. Danielle Venn, 2009. "Legislation, Collective Bargaining and Enforcement: Updating the OECD Employment Protection Indicators," OECD Social, Employment and Migration Working Papers 89, OECD Publishing.
    5. Jens Arnold & Peter Hoeller & Margaret Morgan & Andreas Wörgötter, 2009. "Structural Reforms and the Benefits of the Enlarged EU Internal Market: Much Achieved and Much to Do," OECD Economics Department Working Papers 694, OECD Publishing.
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    More about this item

    Keywords

    croissance; growth; labour market; marché du travail; marchés de produits; political economy; product markets; reforms; regulation; réformes; réglementation; Turkey; Turquie; économie politique;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P5 - Economic Systems - - Comparative Economic Systems

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