2012年-CEPS欧洲政策研究中心_Relative_Income_Growth_and_Convergence_22页_367kb

Summary of "Relative Income Growth and Convergence"

Core Content

This paper evaluates Turkey's growth prospects over the next decade, focusing on its potential to close the income gap with the EU. It suggests that Turkey's economic trajectory, while volatile, presents a promising outlook for convergence, especially if macroeconomic stability and EU negotiations serve as policy anchors. The paper also highlights the importance of structural and demographic factors in shaping these growth prospects.

Main Points

• Income Position:

  • Turkey's real income in 2003 was approximately 24.7% of the EU-15's PPP-adjusted per capita income and 12.3% in nominal terms.
  • Compared to the EU-10, Turkey's income level was significantly higher, especially in nominal terms.
  • Turkey's per capita income is still lower than the EU-15 average, but its growth potential is strong, especially given its dynamic economy and demographic trends.

• Growth Prospects:

  • The paper argues that Turkey’s growth is not solely dependent on GDP per capita but also on GDP per worker, which is influenced by demographic structure and employment rates.
  • Turkey has a lower employment ratio compared to other EU countries due to a smaller proportion of the population in the working age group and lower participation rates.
  • The demographic transition in Turkey is expected to lead to a growing working-age population, which could support faster economic growth.

• Sectoral and Regional Analysis:

  • Labour productivity in Turkey is comparable to that of the Czech Republic, Hungary, and Poland, with higher productivity in services, construction, and industry.
  • Regional disparities are significant, with Turkey's poorest region having GDP per capita about one-fourth that of its richest region, which is more pronounced than in other EU countries.
  • The modern sector (industry and services) in Turkey is more productive than the traditional agricultural sector, suggesting potential for structural transformation.

• Convergence Scenarios:

  • The paper outlines two growth scenarios that could lead to convergence.
  • One scenario involves sustained investment in both human and physical capital, along with improved institutional quality.
  • Another scenario highlights the role of foreign direct investment (FDI) in boosting growth, especially given Turkey's potential to attract FDI due to its strategic location and market size.

• Key Determinants of Growth:

  • Human Capital Investment: Turkey's investment in education is low, with only 3.91% of GDP allocated to education and 24.3% of adults having upper secondary education.
  • Physical Capital Investment: Investment in physical capital is crucial for growth, and Turkey has the potential to increase this.
  • Institutions: Strong institutions are necessary for sustainable growth, and the paper suggests that institutional reforms are vital for Turkey to converge with the EU.

Critical Role of Foreign Direct Investment (FDI)

• FDI is identified as a key driver of growth, especially in the context of Turkey's economic development.
• The paper notes that Turkey's economic structure and location make it an attractive destination for FDI, which could accelerate convergence with the EU.
• FDI is expected to play a more significant role in Turkey's growth than in the CEECs, which have historically relied more on total factor productivity (TFP).

Demographic Trends

• Turkey is in the early stages of a demographic transition, with a declining population growth rate and a rising proportion of the working-age population.
• The demographic bonus, which refers to the increased share of working-age individuals, could support economic growth if effectively harnessed.
• However, the low rate of employment in the modern economy, particularly among women, suggests that this potential has not yet been fully realized.

Comparison with Other Countries

• Turkey's growth performance is compared with both the EU-15 and the EU-10, as well as the CEECs (Poland, Hungary, Czech Republic).
• Turkey's income levels are closer to the EU-10 than to the EU-15, and its potential for convergence is greater than that of the CEECs.
• The paper suggests that Turkey's current growth rate, combined with structural reforms, could position it as the most dynamic economy in Europe by the end of the decade.

Conclusion

• The paper concludes that Turkey has the potential to significantly improve its income levels and living standards over the next decade, especially if it achieves macroeconomic stability and implements structural reforms.
• Convergence with the EU is not only possible but expected, given Turkey's demographic and economic potential.
• The challenge lies in transforming the current employment and productivity structures to fully capitalize on its growth opportunities.

Key Information

• Authors: Kemal Derviş, Daniel Gros, Faik Öztrak, Fırat Bayar, and Yusuf Üsk.
• Publication: EU-Turkey Working Paper No. 8/September 2004.
• Project: "Strategy for the EU and Turkey in the Pre-Accession Period" launched in August 2004.
• Financial Support: Provided by the Open Society Institute of Istanbul, Akbank, Coca Cola, Dogus Holding, Finansbank, and LUISS.
• Data Sources: EUROSTAT, New Cronos, Turkish State Institute of Statistics (SIS), and the US Census Bureau.