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Turkey on the way to high income
Martin RaiserCountry Director
World Bank
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Key Messages
• Turkey has done well in the past decade
• Due to demographics, past reform efforts and relatively strong financial buffers Turkey is likely to do well in the next decade
• To avoid a growth slow-down at high income, Turkey needs to deepen structural reforms
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Turkey has done well because of economic integration
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Turkey has become part of the European Convergence Machine
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The Customs Union with the EU has made Turkish trade brainier
(a) Product composition (% of exports to EU-27) (b) Intra-industry trade (% of exports to EU-27)
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2030
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Year
Vehicles Machinery TextilesMetals Foodstuffs Vegetables
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Turkey has done well because of social inclusion
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The shift of economic activity to the East has played a big role in inclusion
Spatial distribution of newly created firms between 2007-2011
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Supported by public investments
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And improved public services
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Turkey’s prospects are favorable because of demographics
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But sustaining growth into high income is difficult
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And growth in Turkey has been volatile given dependence on foreign financing
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The middle income trap
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19541956
19581960
19621964
19661968
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
2010 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
TurkeyBrazilSouth KoreaMalaysiaMexicoSouth Africa
GDP per capita in 2011 constant PPP USD
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What Turkey needs to do to sustain growth: deepen integration
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What Turkey needs to do to sustain growth: boost productivity
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What Turkey needs to do to sustain growth: boost energy efficiency
World
Turkey
OECD
France
Germany
UK
Denmark
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35
0.3
0.26
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0.12
0.11
Energy Intensity (toe/000 2000 USD)
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What Turkey needs to do to sustain growth: boost savings and contain growth in transfers
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What Turkey needs to do to sustain growth: boost female employment
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What Turkey needs to do to sustain growth: make institutions fit for high income
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Turkey: an emerging regional and global power
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Turkey: an emerging regional and global power
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United St
ates
Brazil
Japan
Indonesia
Mexico
United Kingd
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Russian
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tion
German
y
France
Turke
y
Canad
aIta
ly
South Korea
Australi
aSp
ain
Argentina
South Afri
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Poland
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20
30
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The 20 largest economies in the world in 2011 and 2060 - OECD
Total GDP in 2011 USD, 2011 and 2060)