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

Daron Acemoglu and Üçer, Murat

No 14070, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Economic growth; Emerging markets; High-quality growth; Institutions; Productivity; Shared prosperity; Turkey (search for similar items in EconPapers)
JEL-codes: E65 O52 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-ara
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Chapter: High-Quality Versus Low-Quality Growth in Turkey: Causes and Consequences (2020)
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