About Turkish Economy

Turkey Side

Economic system of Turkey between the years of 1950-60 was “Liberalization and agriculture based integration to the World economy.” The economic goals of the new government :

• Creating a development in agriculture,
• Protecting and supporting private cooporations,
• Increasing the number of “know-how” people  with education. (involving women)
• Having better numbers of export and import,
• Implementing the “free market” for all domestic transactions, export and import,
• Limiting the number of SEE’s, also decreasing the value of them,
• Encourage the foreign capital to invest in Turkey and supporting the foreign capital with the aim of globalization.
• Implementing mechanization in agriculture and give priority to agriculture in investments.
• Giving the priority to energy sector and construction of highways.

According to new plan; the distribution of new budget was;

44% – Transportation and Telecommunication

8%  -  Industry

16%  - Energy

16% – Agriculture

16% – Education, Military and else.

Also, according to the plan, 49% of the new investments were going to be financed from outer sources, like Marshall funds, debts from other countries etc.

Till the” Menderes” period, static policy offers  for the new investments to be financed from domestic sources. We can easily see here that, starting with “Menderes”  period, Turkey started to change their economy policies greatly. According to the new Liberal economy; Government should support private cooporations in all means; take the required economic precautions along with providing public economic services and put great effort to help domestic and foreign cooporations to use their maximum capacity.

In the first few years of period;

• There were a huge expand in commercial capital,
• Countryside to be active in market,
• Urbanization increased,
• A big increase in agriculture sector and agricultural products. For example, number of tractors in the country was increased from 1156 in 1949 to 42136 in 1960)

The result of the new economic polices were first a huge increase in prices which causes superinflation; payment difficulties and economic depression starting with increasing unemployment. Total amount of debts increased by 750%  during the period.

One of the first of he Government was devaluation. During the “Menderes”  period; Turkey experienced two devaluations;

First Devaluation      : 1 USD ----  1.30 TL to 2.80 TL

Second Devaluation : 1 USD ----  2.80 TL to 5.50 TL

Also price controls started to be implemented again, commercial credits were limited and interest rates were increased as well.

The aim of the devaluation was to keep the import low and making the import of goods easier.

However, after the devaluation, all bad things started to happen. Actually, there were no problem with the country’s export goods at that time; like traditional agricultural products. Postwar- European countries were in need of them and these products could be easily sold to them. After the devaluation

• The cost of living were greatly increased,
• Inflation went to super high levels,
• Debts got higher,
• Big trade gaps happened,
• Lack of goods and black market transactions occured,
• Folks started to complain about Government.

DP came into power with criticizing government interruptions but in the year of 1956; Turkish National Security Law was to be taken into action again; limiting the commercial credits, implementing price controls in imports and exports also increased the interest rates. DP’s economic point of view was liberal and open economy; they gave priority and supported private ownerships. Their economic activities made the society happy at earlier times; however in the long run; Turkish economy started to make so much imports and the balance was ruined.

The period ended with coup. Military came into power.