ESI lecture in Bozen: Turkey's economy. A history of dramatic change

ESI Senior Analyst Verena Knaus gave a lecture on Turkey's economic development at the European Academy in Bozen, Italy, as part of the academy's Masters Programme in European Integration and Regionalism.

Turkish economy is currently characterised by several factors:

• Informal labour market makes up about 50% of total employment
• High income and regional disparities: Kocaeli: € 7,000, Van € 900
• 34% employed in agriculture

This in turn means that Turkey needs to address its internal imbalances and regional disparities. It also needs to improve labour force participation, especially among women who still have a literacy rate of only 75% compared to more than 90% among men.

Turkey has come a long way since 1963 when the so-called 'Ankara Agreement' or Association agreement was signed. This first step was followed by application for EU membership in 1987 and customs union in 1995. Since 2002 Turkey has embarked on an Europeanisation process that touched on hitherto sensitive issues such as death penalty, Kurdish language broadcasting or State Security Courts. The start of negotiations on EU accession on 3 October 2005 will undoubtedly deepen and accelerate reform of the Turkish society, state and economy.

After the "lost decade" in the 1990s, when Turkey saw 9 governments, went through an exchange rate crisis, witnessed massive capital outflows and even negative growth, Turkey reached annual growth rates of nearly 10% in 2004.

Turkey's development in recent years makes it possible to imagine a very different Turkey in 2015:

"Should negotiations commence, the road to accession will be long and laborious, requiring a process of comprehensive modernisation throughout Turkey… the Turkey which one day accedes, will certainly be a different country than it is today. It is in the midst of radical political, social and economic change and needs to continue along this path."

Joschka Fischer, Turkish Policy Quarterly, 2004