OECD Reviews of Regulatory Reform: Turkey 2002

Crucial Support for Economic Recovery

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Among the OECD countries, Turkey figures as a comparative latecomer to regulatory reform. Yet, there is a crucial need for it. Over the last three decades, the Turkish economy has suffered from macro-economic instability and chronic inflation, with implications for both investment and growth. Governance and regulatory structures remained weak and contributed also to the 2001 economic crisis.

Nonetheless, this review notes the highly encouraging efforts currently being undertaken to reform key economic sectors, the public administration and the regulatory framework. These developments appear to mark a fundamental break with the past. Important elements, such as a clear competition policy, are already in place. Fighting corruption, among other measures, is high on the policy agenda, and constitutional amendments are reshaping the relationship between citizens and the state. The "depoliticisation" of the public sector and its renewal on a merit basis is underway. Future success will depend crucially on the continuing implementation of the programme. In particular, sustained political commitment is required well beyond the recovery from the recent crisis.

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Executive Summary

The roots of Turkey’s current reforms can be traced back to the 1980s. A state-directed and inwardly focused model of economic development served Turkey well before then, but was no longer adapted to Turkey’s needs, and reforms to open up the economy were started. The most impressive development was in trade liberalisation. By 2000, exports accounted for 40% of GDP. The Customs Union with the EU, which became effective in January 1996, was another major step forward. But the crisis of 2000/2001, based on unsustainable fiscal and external imbalances, highlighted how far Turkey still had to go....

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