Turkish Economy

Turkish Economy - Structure and Grwoth
At the time of the collapse of the Ottoman Empire during World War I, the Turkish economy was underdeveloped: agriculture depended on outmoded techniques and poor-quality livestock, and the few factories producing basic products such as sugar and flour were under foreign control. Between 1923 and 1985, the economy grew at an average annual rate of 6 percent. In large part as a result of government policies, a backward economy developed into a complex economic system producing a wide range of agricultural, industrial, and service products for both domestic and export markets.
Economic Development
At the birth of the republic, Turkey's industrial base was weak because Ottoman industries had been undermined by the capitulations. World War I and the War of Independence (1919-22) also had extensively disrupted the Turkish economy. The loss of Ottoman territories, for example, cut off Anatolia from traditional markets. Agricultural output--the source of income for most of the population--had dropped sharply as peasants went to war. Even the production of wheat, Turkey's main crop, was insufficient to meet domestic demand. In addition, massacres and the emigration of Greeks, Armenians, and Jews, who had dominated urban economic life, caused a shortage of skilled laborers and entrepreneurs.
Turkey's economy recovered remarkably once hostilities ceased. From 1923 to 1926, agricultural output rose by 87 percent, as agricultural production returned to prewar levels. Industry and services grew at more than 9 percent per year from 1923 to 1929; however, their share of the economy remained quite low at the end of the decade. By 1930, as a result of the world depression, external markets for Turkish agricultural exports had collapsed, causing a sharp decline in national income. The government stepped in during the early 1930s to promote economic recovery, following a doctrine known as etatism (see Glossary). Growth slowed during the worst years of the depression but between 1935 and 1939 reached 6 percent per year. During the 1940s, the economy stagnated, in large part because maintaining armed neutrality during World War II increased the country's military expenditures while almost entirely curtailing foreign trade.
After 1950 the country suffered economic disruptions about once a decade; the most serious crisis occurred in the late...

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Structure of the Economy
In the years after World War II, the economy became capable of supplying a much broader range of goods and services. By 1994 the industrial sector accounted for just under 40 percent of GDP, having surpassed agriculture (including forestry and fishing), which contributed about 16 percent of production. The rapid shift in industry's relative importance resulted from government policies in effect since the 1930s favoring industrialization (see fig. 8). In the early 1990s, the government aimed at continued increases in industry's share of the economy, especially by means of export promotion.
Services increased from a small fraction of the economy in the 1920s to just under half of GDP by 1994. Several factors accounted for the growth of the services sector. Government--already sizable under the Ottomans--expanded as defense expenditures rose; health, education, and welfare programs were implemented; and the government work force was increased to staff the numerous new public organizations. Trade, tourism, transportation, and financial services also became more important as the economy developed and diversified.

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