New World Bank Report Looks at Turkey’s Rise to the Threshold of High-Income Status and the Challenges Remaining

December 10, 2014

ISTANBUL, December 10, 2014—Steady growth over the past decades has brought Turkey to the threshold of becoming a high-income economy, prosperity has been broadly shared across income groups in the society, and the size of the middle-class was doubled, according to a new World Bank report, Turkey’s Transitions: Integration, Inclusion, Institutions. However, challenges remain. The report examines Turkey’s experience in the transition from a lower middle-income to an upper middle-income economy, and looks at what has worked well and what needs to change.

On the occasion of today’s report launch, Laura Tuck, World Bank Vice-President for Europe and Central Asia, stated: "The rise of emerging markets is changing the global development landscape. For many developing countries, the most pertinent lessons in development come, not from the industrialized countries of Western Europe and North America, but from the dynamic emerging market economies that are well on their way towards high income status.” 

Turkey’s Growth
  • Turkey’s average annual GDP growth rate was 4.5 percent between 1960 and 2012. 
  • The share of Turkey’s middle-class increased from 18 percent to 41 percent of the population  between 1993 and 2010.
  • The income of the bottom 40 percent of Turkey’s population has increased almost at the same rate as the rate of total population growth, indicating that prosperity has been broadly shared   across income groups of the society.

Tuck added that, “As a reflection of the growing role of emerging markets in the global economy, there is increased interest in the exchange of experiences among policy makers of developing countries with their peers facing similar challenges. Indeed, with a per capita income of around US$10,500, Turkey is just a few years away from crossing the threshold of becoming a high-income economy, if past growth rates are sustained. According to the OECD, by 2060 Turkey will be the 12th largest economy in the world. Turkey’s economic rise has attracted attention, and this book is an account of how this success was achieved and what lessons other countries can learn from it.”

The report finds that two central themes have dominated Turkey’s economic development over the past three decades: integration and inclusion.

According to the report, Turkey’s economic integration – both in terms of the country’s integration into global markets and among advanced and the integration of underdeveloped regions in Turkey’s economy – has been a driver for economic progress. Moreover, Turkey used the opportunity of deep financial crisis over a decade ago to reform its banks and its public finances – allowing public expenditure to move from debt service to public service. In addition, economic progress has been socially inclusive as poverty has been reduced by more than half, and access to high-quality health, education, and municipal services has expanded.

And yet, in spite of its remarkable achievements so far, Turkey has yet to establish the institutional prerequisites of a high-income economy. In a less forgiving global economic context, the risk of the so-called “middle-income trap” looms for countries that let off on their reform efforts. For Turkey to complete the transition to a high-income economy, improvements in the rule of law, in public accountability and transparency, and in the climate for entrepreneurship and innovation will be needed.  

Martin Raiser, World Bank Country Director for Turkey and primary author of the report, said, “Turkey is undergoing multiple transitions en route to a high-income economy, some more advanced than others. We hope Turkey’s experience inspires policy makers in other emerging markets to aim for high-income status. And we hope that by drawing up a balance sheet of Turkey’s achievements and challenges, this book will also inspire Turkey’s policy makers to redouble their own reform efforts and lift their country into the ranks of advanced high-income economies. That would make the lessons from Turkey’s development experience all the more convincing for other countries.”

Media Contacts
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