History of Turkey's Economic Crises: The Evolution of the Economic

History of Turkey's Economic Crises: The Evolution of the Economic

Hakan Ay (Dokuz Eylül University, Turkey) and Öznur Uçar (Independent Researcher, Turkey)
DOI: 10.4018/978-1-5225-2245-4.ch019
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Abstract

Examine the history of Turkey's economic crisis based economy will give clues for a much better economy. For 92 years, history of Turkey Republic has experienced the development stages of democracy and economy. Turkey has completed the journey of economic development as the most advanced economy in the world, although began as an undeveloped country. Turkey has been affected from the global and regional crises and overcame the nine economic crises. The implemented economic crisis policies showed parallelism with the trend of the world economic thoughts and has been shaped around Keynes and Friedman applications. All these details have been described in our study chronologically. With our study, we were trying to portray the Turkish economy's yesterday and today. Thus, we believe that our study will create data for predicting the future of the Turkish economy and the future of the world of economy.
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New Era: 1929-1945

The Republic of Turkey was established in 1923 following the Turkish War of Independence. However, the young republic was not only born out of a gruelling war but had inherited the debt from its Ottoman predecessor state. The newly established republic did not possess a state central bank and wasn’t considered to be lucrative in terms of attracting foreign trade. In addition to this, Turkey was predominantly an agrarian country and had been adversely affected from global fluctuations in agricultural prices and adverse weather conditions in 1925. State revenues decreased as a direct result of these factors at a time when the newly founded state was grappling with the Ottoman debt it had inherited and nationalisation. These adverse factors continued until the Great Depression. The decrease in the consumption index was also a reality during the above period. The government raised new taxes and subsequently increased the rates of existing taxes. Furthermore, the nationalisation process that had commenced in 1926 caused the decline in the export rate and the flight of foreign capital from the newly established republic. (Açıkgöz and Özkan,2009)

Key Terms in this Chapter

Structural Problems: Problems which cause the uneven functioning of the economy.

Banking Reform: The reform that included legislative regulations that necessary for the optimal banking sector.

Structural Regulations: Regulation against problems which cause the uneven functioning of the economy.

Broker: Persons engaged in the purchase and sale of securities such as money, gold and foreign exchange.

Economic Crisis: Shocking economic events that occur suddenly, adversely affect in both the state and companies.

Twin Crises: Twin crises is a term in economics that refers to simultaneous crises in banking and currency.

Broker Crisis: A financial crisis that occurred due to increased to the rate of interest because of competition between bankers and banks.

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