turkey on the way to high income

Turkey on the way to high income

Martin RaiserCountry Director

World Bank

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

Turkey has done well because of economic integration

Turkey has become part of the European Convergence Machine

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)

010

2030

40(s

um) s

h_re

gion

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Year

Vehicles Machinery TextilesMetals Foodstuffs Vegetables

Turkey has done well because of social inclusion

The shift of economic activity to the East has played a big role in inclusion

Spatial distribution of newly created firms between 2007-2011

Supported by public investments

And improved public services

Turkey’s prospects are favorable because of demographics

But sustaining growth into high income is difficult

And growth in Turkey has been volatile given dependence on foreign financing

The middle income trap

19501952

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

What Turkey needs to do to sustain growth: deepen integration

What Turkey needs to do to sustain growth: boost productivity

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

0.18

0.18

0.16

0.12

0.11

Energy Intensity (toe/000 2000 USD)

What Turkey needs to do to sustain growth: boost savings and contain growth in transfers

What Turkey needs to do to sustain growth: boost female employment

What Turkey needs to do to sustain growth: make institutions fit for high income

Turkey: an emerging regional and global power

Turkey: an emerging regional and global power

ChinaIndia

United St

ates

Brazil

Japan

Indonesia

Mexico

United Kingd

om

Russian

Federa

tion

German

yFra

nceTu

rkey

Canad

aIta

ly

South Korea

Australia Sp

ain

Argentina

South Afric

a

Poland

0

10

20

30

40

50

60

70

The 20 largest economies in the world in 2011 and 2060 - OECD

Total GDP in 2011 USD, 2011 and 2060)