week9

• Foundations of the economic policies of the Republic of Turkey

  Laid with the establishment of the Republic and implemented under the shaping of Mustafa Kemal Atatürk
• Atatürk said "No matter how great the military and political victories are, if they are not crowned with an economic victory, they cannot survive and fade away in a short time"
• Two modes of economic policy during Atatürk's period

  • Liberal period between 1923 and 1929
  • Period in which statist policies were implemented between 1929 and 1938
• Liberal period 1923-1929


  • Liberal economic policies were implemented
• Period 1929-1938


  • Statist policies were implemented due to lack of capital accumulation from liberal policies and impact of 1929 Depression
• Izmir Economic Congress in 1923

  1. Determine economic policy of new republic

  2. 1135 people from across the country discussed problems and proposed solutions for 15 days
• Liberalism


  Comprehensive ideology advocating state should minimally intervene in economic and social lives of individuals, market should operate according to its own rules based on competition, private property and freedom to contract
• Decisions at Izmir Economic Congress aimed to strengthen political independence with economic independence and develop Turkish entrepreneurship
• Main principles of liberal policies were generally adopted at the Izmir Economic Congress
• Period 1923-1929 carried out according to free market economy principles from Izmir Economic Congress
• Free zone


  Idea to enable mutual increase in trade with other countries
• 4/3 of Turkey's population lived in rural areas and made a living from agriculture in early Republic
• Agricultural activities were carried out according to traditional, primitive methods and landlordism in some regions
• Development of agricultural sector in Turkey started with establishment of Republic, decisions taken and policies implemented
• Lack of capital and trained manpower prevented desired development in new Republic
• 1929-1930 world economic crisis had negative impact on Turkey, reducing export revenues and causing foreign trade deficit
• Turkish statism model 1929-1938


  • Scope of private sector narrowed, state had to undertake duties of enterprises lacking capital to invest in priority sectors and foreign enterprises with economic problems
• 1. year development plan 1933-1938

  1. Establishment of public economic enterprises like Sümerbank and Etibank

  2. Factories established to produce basic consumer goods and nationally produced raw materials
• No foreign debt taken during 1929-1938 period, installments of Ottoman debt paid, inflation almost non-existent, 26 tons of gold reserves in Central Bank
• Successful high school students sent to European universities on state scholarships to meet human capital needs of new industry
• Atatürk organized domestic goods week in 1935s to encourage use of domestic products
• Swap/Barter system


  International economic activities where countries used each other's currencies, buying as many goods as they sell to avoid trade deficit