The economic future of Turkey and its potential to emerge as a leading economy is both unpredictable and fascinating. As one of the few secular, democratic states in the Middle East, Turkey has acted as a strong stabilising force in the region. Its rich history and culture, and thriving tourism industry have contributed to maintaining its influence and soft power in both developing and developed countries. Turkey has also played an active role in multilateral institutions, and chaired the 2015 cycle of the Business 20 (part of G20). However, the country has recently suffered from increasing political instability and a lack of sustainable economic policies which have led to a decline in growth and development. This paper will argue that Turkey has a strong potential to emerge as an leading economy despite its current political instability.
Since its formation as the Republic of Turkey in 1923, the economic strategies pursued by the state were aimed to develop its local industries and which were initially government-owned and funded. By the 1980s, under the leadership of Prime Minister Turgut Ozal and the Justice and Development Party (AKP) Turkey began to liberalise its economy. However, the emergence of the Kurdish Independence Movement, and Turkish Central Bank crisis of 2000, halted the economic development of the country. As a result, the economy did not reflect positive growth until 2002. From 2002 to 2013, Turkey enjoyed a steady GDP growth rate of 4% each year. In 2013, Turkey was identified as one of the emerging MINT economies in response to the steady GDP growth and increasing FDI flow. Its FDI flow grew from USD9.1 billion in 2010 to USD12.9 billion in 2013.
Turkey’s adjacency to Europe, Asia, and the Middle East allows for maximum market access. With oil and fuels prices on the rise, a geographic proximity to markets of over 1 billion customers, gives Turkey a major competitive advantage. In addition, Turkey has formed many free trade agreements in the region, most significantly the EU’s Customs Union agreement. Therefore, even if Turkey operates outside of EU borders, it can still trade freely within its markets. Furthermore, there have been plans by the Turkish Chamber of Shipping to establish ports in the Aegean, Mediterranean, and Black Seas. While the construction of the Candarli Port in the Aegean Sea will cost the state USD 980 million, it is set to create employment opportunities and facilitate trade growth.
It should be noted that throughout these periods of economic growth, social and political instability has remained present. The attempted military coup by the Peace at Home Council in July 2016, and ongoing Syrian refugee crisis has taken its toll on the economy. In 2016, a survey of Reuters economists concluded that economic growth would increase by 3.5% in 2016-2017, this estimate fell below the government’s prediction of a 5% growth. Yet, FDI flows to Turkey remain steady and the tourism industry is growing steadily.
In conclusion, Turkey has established economic systems and institutions since the 1980s. This has created a foundation for steady economic growth despite momentary social and political struggles. Established economic policies coupled with its geographical advantage outweighs Turkey’s internal issues and will likely result in continued steady growth albeit with periods of slower growth.
A Closer Look 