The Republic’s Economic Balance Sheet Is Mixed

Professor of Economics and Economic History at Boğaziçi University, Şevket Pamuk RA 68 evaluates his field in the past century and provides a view for the second century.

The Republic has a mixed economic balance sheet. There was significant progress in many areas in both absolute and comparative terms. At the same time, serious economic problems persisted and intensified. 

As Turkey’s population increased almost six-fold during the last century, its economy experienced major structural changes. In the 1920s, more than 80 percent of the population lived in rural areas and worked in agriculture to earn their living. After rapid rural to urban migration that began in the 1950s, more than 80 percent of the population live in urban areas and work in industry and services today. With the support of technological changes and education, average productivity and incomes have increased more than 10-fold during the last century.

Surely, Turkey today is not a South Korea or Italy or Spain. However, with the significant exception of East Asia during the last half century, Turkey’s rates of economic growth and average incomes have been higher than other developing regions of the world. The per capita incomes in Turkey as a percent of incomes in developed countries had declined during the nineteenth century but increased from about 30 percent to about 55 percent during the last century along with urbanization and industrialization.

Economists also use human development as a leading measure for assessing long term economic development. In terms of health, life expectancy at birth which was about 35 years in the early years of the Republic now stands at more than 77 years. In terms of education, there have been large increases in literacy rates and in years of schooling of the population. Yet, Turkey’s education record today lags behind countries with similar levels of income, both quantitatively and qualitatively.  

The other, less bright side of the economic record is closely related to politics and the interaction between politics and the economy. We have had difficulties establishing a stable multi-party political regime since the end of World War II. Patronage and favoritism have shaped economic policies.

Participation of urban women in the labor force remains very low today. Productivity growth has slowed. Our economy does a good job producing and exporting goods with standard technologies but the record is not strong in goods and services with higher technologies. For a more productive and more balanced economy, our education system needs to be repaired and developed at all levels.

We hope these problems can be addressed during the second century of the Republic.

Published January 2024

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