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Turkey: Economic Stabilization and Prospects for the 1990s
Country Study > Chapter 1 > Historical Setting > Military Intervention and the Return to Civilian Rule > Economic Stabilization and Prospects for the 1990s

ECONOMIC STABILIZATION AND PROSPECTS FOR THE 1990S


In 1980 the rate of inflation was more than 100 percent at one point and stayed at 70 percent for most of the year. The economic stabilization program, begun before the coup, now proceeded unhindered by political resistance. The program aimed to improve Turkey's balance of payments, bring inflation under control, and create an export-oriented free-market economy. To achieve these goals, the plan sought devaluation of the lira on a continuing basis, increases in interest rates to reduce inflation and overconsumption, a freeze on wages, and a reduction in state subsidies. Exports were to be encouraged through subsidies for exporters, reductions in bureaucratic regulations, and the abolition of customs duties on imports needed for export-oriented industries. Foreign investment was actively encouraged by laws providing for easy repatriation of capital and export of profits,and the establishment of four free-trade zones.

The results of the ambitious programs of the 1980s were mixed. On the negative side, purchasing power declined 40 to 60 percent in the decade from 1979 to 1989. Inflation, which had been brought down to annual rates of 30 to 40 percent in the early 1980s, was back up to nearly 70 percent by 1988. The steady decline in Özal's popularity with the electorate can be attributed in large part to these disappointing results. The government continued to run a high deficit, partly because of its unwillingness or inability to end support of large state-owned industries. On the positive side, exports grew by an average of 22 percent each year between 1980 and 1987. Exports in 1979 amounted to US$2.3 billion; in 1988 the value of exports had increased to US$11.7 billion. Moreover, industrial exports rose in this period from less than 45 percent of all exports to more than 72 percent.

The government also undertook to modernize the country's infrastructure, emphasizing improvements in roads and telecommunications. In July 1988, a second bridge across the Bosporus was opened, paralleling the first bridge opened in 1973. Together with a bypass road around Istanbul, the bridges were intended to facilitate commercial traffic moving to and from Europe and the Middle East. Of perhaps the most long-term significance was the ongoing commitment to the Southeast Anatolia Project (Güneydogu Anadolu Projesi -- GAP), a series of dams along the Tigris and Euphrates rivers that when completed would include hydroelectric plants as well as extensive irrigation works. The latter were projected to allow for the irrigation of 1.6 million hectares of land, or twice the area previously under cultivation. In addition, the plentiful hydroelectricity would supply energy for Turkish industry. Because of Turkey's inability to come to agreement with its downstream neighbors, Iraq and Syria, no international funds were made available for GAP. The project, consequently, was self-financed. In 1992 a milestone was reached with the opening of the Atatürk Dam on the Euphrates, northwest of Urfa.

On April 17, 1993, President Özal died suddenly of a heart attack. On its third ballot, on May 16, the assembly elected Süleyman Demirel as Turkey's ninth president. Demirel was succeeded by former economics minister Tansu Çiller, who became Turkey's first woman prime minister. She received nearly 90 percent of the votes cast in a special election for the leadership of the True Path Party. The smooth succession of power may be seen as evidence that civilian rule was firmly in place. Moreover, the accession of Çiller to the prime minister's office, the second highest position in the nation, showed the extent to which Atatürk's legacy, and in particular the political rights of women, was becoming ingrained in the Turkish body politic.A useful introduction to Turkish history from antiquity to the 1980s is Turkey: A Short History, by Roderic H. Davison, updated to 1988. The most thorough scholarly survey of Turkish history to 1975 available in English is the two-volume History of the Ottoman Empire and Modern Turkey, by Stanford J. Shaw and Ezel Kural Shaw. For the modern period, Bernard Lewis's The Emergence of Modern Turkey remains useful. It may be supplemented by two recent works, Feroz Ahmad's The Making of Modern Turkey and Erik J. Zürcher's Turkey: A Modern History . Also useful for the period up to 1975 is Modern Turkey, by Geoffrey Lewis. Patrick Balfour Kinross has written the standard English biography of Atatürk, offering a sympathetic evaluation of Turkey's founding father. For contemporary Turkish history, see George S. Harris's Turkey: Coping with Crisis, Feroz Ahmad's The Turkish Experiment in Democracy, 1950-1975, and Frank Tachau's Turkey: The Politics of Authority, Democracy, and Development. (For further information and complete citations, see Bibliography.)

Data as of January 1995




Last Updated: January 1995


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Turkey was first published in 1995. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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