2008_10_SRP_CornellKaraveli_Turkey

Prospects for a ‘Torn’ Turkey 17
As figure one shows, Turkey’s population is relatively young, with a
considerable population of early working age. The comparison to the average
population structure of the Council of Europe member states is palpable.
Turkey will hence not for many decades experience the negative economic
effects of an aging population. Meanwhile, Turkey’s population growth is
projected to decline from ca. 1,25% per year at present – which implied an
increase of roughly a million people per year in the past decade – to less than
half that number by 2020. Based on the Economist Intelligence Unit’s
projections, the Turkish population – at roughly 75 million today – is
scheduled to grow to about 84 million in 2020 and 88 million in 2030. Such a
population trajectory is highly favorable for economic growth, and is one
explanation frequently cited for the Asian economic miracles of the second
half of the twentieth century. Yet this opportunity must be seized for a
country to experience such benefits.
Turkey’s expected population size would make it the most populous country
in the European Union should it gain membership, with a population of more
than 15% of the EU-27. That in itself makes Turkey clearly a regional power
to contend with simply in terms of its demographic and economic power.
Turkey’s economy has become known for its boom-bust cycles. Indeed,
recurring economic crises have characterized Turkey since the 1950s. In
recent decades, rampant inflation routinely hovered around 100%, while
major shocks hit the economy in 1994, and then again more viciously in 2000-
2001. That last crisis was particularly disastrous, as it led to the currency
falling by 40 percent against the dollar almost overnight, wiping away
savings and wages. In 2001, the economy contracted by over 7 percent. Since
then, however, Turkey has implemented an IMF-sponsored stabilization
program, which built a more stable basis for a developing economy. Turkey’s
economy has been developing rapidly, and has enjoyed the highest growth
rates of the OECD, at ca. 7 percent yearly. An extensive privatization
program brought in massive foreign direct investment, facilitated by the
reduction of inflation rates from ranges of 60-100 percent to the single digits,
and the streamlining of legislation to European standards. A 640-percent
growth in companies with foreign capital was experienced from 2002 to 2007.
While this economic recovery program was initiated by the former World