OECD Development Centre Working Papers

The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.

English, French

Capital Flows and the External Financing of Turkey's Imports (Special Series on Mixed Credits, in Collaboration with ICEPS)

Subsidized capital flows have made a major contribution to the recovery of the Turkish economy from the acute balance of payments crisis of the late 1970s. The inflow of foreign capital on a substantial scale has facilitated rapid growth in imports of essential raw materials and investment goods which, in turn, has been instrumental in sustaining a comparatively high rate of economic growth.

A balanced account, however, needs to take into consideration the negative side effects associated with subsidized credits. Subsidized capital inflows have resulted in overborrowing and consequently in overexpansion of the public sector, particularly during the post-1984 phase. A structural disequilibrium has developed, in the sense that the majority of medium- and long-term capital inflows has been directed to the public sector, and within the public sector, primarily to infrastructure projects. The private sector has been able to borrow mainly on a short-term basis, to satisfy working ...


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