The impact of structural adjustment on the Turkish economy: the 1980s and 1970s compared

Abstract

The main issue that this research deals with is the evaluation of the structural adjustment policies adopted in 1980. Their impact on the Turkish economy is assessed, and comparisons are made with the 1970s. Econometric methods are used to assist the evaluation and two models, based on the Klein model I, are developed and compared. This study also includes an analysis of the changes that occurred at the sectoral level (agriculture, manufacturing, and tourism) as a result of the 1980 structural adjustment programme. In addition, the thesis contains a review of the literature on structural adjustment. An overview of the Turkish economy is provided including the economic policies implemented by different Turkish governments in 1978 and 1979.The research findings show the need to stabilise the exchange rate. Inflation has been exacerbated by continuing depreciation. Domestic supply, in particular industrial production, is the key determinant of exports, not the exchange rate. In addition, floating interest rates, which rose substantially in the 1980s, appear to have a moderate positive impact on savings and credits. Also, the evidence suggests that structural adjustment has improved income distribution in Turkey. At the sectoral level, there is a need to increase investment in manufacturing, liberalise agricultural prices, and increase the role of tourism as a source of foreign exchange.