1 / 83

HIST 3051-PART 3 HISTORY OF TURKISH REPUBLIC BAHÇEŞEHİR UNIVERSITY 2007 Prof. Dr. Zafer Toprak

HIST 3051-PART 3 HISTORY OF TURKISH REPUBLIC BAHÇEŞEHİR UNIVERSITY 2007 Prof. Dr. Zafer Toprak First part available at: www.ata.boun.edu.tr under faculty / Zafer Toprak. Political Periodization Single Party Era – 1923-1945 Multy Party Era – 1946 - Economic Periodization

rna
Download Presentation

HIST 3051-PART 3 HISTORY OF TURKISH REPUBLIC BAHÇEŞEHİR UNIVERSITY 2007 Prof. Dr. Zafer Toprak

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. HIST 3051-PART 3 HISTORY OF TURKISH REPUBLIC BAHÇEŞEHİR UNIVERSITY 2007 Prof. Dr. Zafer Toprak First part available at: www.ata.boun.edu.tr under faculty / Zafer Toprak

  2. Political Periodization Single Party Era – 1923-1945 Multy Party Era – 1946 - Economic Periodization Interwar years, 1923-38 The WWII & recovery 1939-1953 Democratic rule & agricultural growth 1951-1960 Inward-looking planning, 1961-1977 Reform and export-oriented growth 1980-

  3. Building National Economy 1923-1928 The response to the Great Depression 1929-1932 Statism 1933-1938 War Economics 1939 - 1945 Aftermath of War Economics 1946 – 1948 The Liberalization Era, 1948-1953 Mixed Economy 1954-1957 Economic stabilization 1958-1962 Inward-looking planning 1963 - 1977 Economic Distress 1978-1979 Export Oriented Policy 1980 -

  4. The Turkish Economic History in 1923 The Country economically in shambles devastated, in ruin 1923-29 Foundation of the Republic A period of institutional change westernization & reconstruction 1929 Great Depression Compounded problems 1930 s’ - Development policy with industrialization as its backbone

  5. War & Population ExchangeDeparture of Greeks and Armenians • Lack of entrepreneurial know-how • Lack of prosperous market • C) Lack of Economic IndependenceLausanne Treaty – import tariffs 1929 • D) Lack of EncouragementLaw on the Encouragement of Industry 1927 • Tax exemptions • E) Economic Instability in the World • 1929 Crisis

  6. First Turkish Economic Congress – İzmir February 1923 Importance of economic independence Choice between liberalism and state intervention National Economy versus Economic liberalism Call for protection of local industry No opposition to foreign investment Mixed economy State responsible for major investments

  7. Subsidization in the 1920s Protectionism in the 1930s The policy after 1929 State Economics - Statism An inward-looking, import-substitution strategy Mixed economy with a large public enterprise sector & economic planning One of the first examples among developing countries After World War II The standard policy in decolonized countries

  8. This policy continued until 1980 A short period of liberalization in the early 1950s Planning – Constitutional requirement in 1961 The policy of import substitution broke down in the late 1970s Radical turnaround in development strategy Long overdue The development strategy after 1980 Liberalization of trade and export orientation

  9. Turkey in 1923 An agrarian economy with rudimentary modern industry Frontier economy: abundant resources of uncultivated land No urban working class in the early 1920s 1920 & 1930 Agricultural expansion – Extensive farming A frontier economy: abundant unciltivated land Extensive (horizontal) expansion

  10. 1929 Great Depression Agriculture recovered in the 30s’ 1927-1928 hit by a long drought No system of buffer stocks to regulate prices Loss of purchasing power

  11. World Economic crisis hit very hard Wheat price declined by 2/3 Terms of trade deteriorated 100 – 1929 46 – 1934 Imposition of quatos and restrictions Imports declined 256 m. TL 1929 85 m. TL 1932

  12. Late 1940s’ Marshall Plan Mechanization and Intensive farming Frontier conquered in the 1950s Distribution of uncultivated public land to private smallholders [küçük üretici] 1945 – Land Reform

  13. 1920s Industrialization based on private entrepreneurship Support of the emerging domestic industry Accumulation of private capital in the industrial sector with government intervention whenever necessary Emphasis on public financingwith the active participation of private local investors& capital contributions from foreign investors

  14. Initially emphasized sectors: Natural areas of IS Raw metarials could be obtained domestically Sugar, textiles & cement Constraints: 1923 Lausanne Peace Treaty The tariff and tax structure Frozen tariffs at the level of 1916 for 5 years No differential rates of taxes on imported and locally produced commodities No quantitative restrictions on foreign trade 1924-1929 Exception: Government monopolies for revenue purposes

  15. Direct investment by foreigners encouraged Particularly in partnership with Turkish citizens 1/3 of the firms established in the 1920s Joint ventures

  16. Government subsidization of domestic private enterprise Law for the Encouragement of Industry, 1927 A wide variety of incentives and subsidies Private investors profited from state monopoly of alcohol, sugar, tobacco, explosives, oil, matches, harbors etc. Partly farmed out to private companies

  17. Financial infrastructure – Lack of Capital In agriculture a) Agricultural Bank [Ziraat Bankası] reorganized 1925 In business & industry b) Business Bank [İş Bankası] 1924 c) State Industrial and Mining Bank 1925 [Devlet Sanayi ve Maadin Bankası] d) Sümerbank in industry 1933 e) Etibank in mining 1935 to meet the shortages of capital for financing industrialization and mining

  18. Financial Policies Replacement of tithe [Aşar] by sales tax & monopolies Conservative – balanced budget, low inflation Tight monetary policy - strong TL DENK BÜTÇE – SAĞLAM PARA Balanced Budget – Strong Currency Trade deficit in the 1920s due to Lausanne Treaty

  19. 1929 A turning point for economic development The beginning of the Great Depression Tariff and tax autonomy The year of abolition of the Capitulations The first installment of the Ottoman debts To be paid between 1929-1953

  20. Exporter of primary commodities Turkey sufferred from adverse terms of trade development A sharp deterioration in external terms of trade A deterioration in internal terms of trade against agriculture The plight of the peasantry

  21. Growth rates 1927-29 to 1937-39 % 6.3 Per capita growth % 4.2 The volume of exports continued to rise in the 1930s Protection as an infant-industry policy The new tariff – an average nominal protection of % 46 The previous average rate of protection % 13

  22. 1929 An increase in imports A depreciation of the TL A law – June 1931 Import restrictions Law for the Protection of Turkish Currency 1930 Türk Parasını Koruma Kanunu authorizing government to intervene in the local exchange markets To stabilize the international value of the TL

  23. Bileteral trade Clearing & Barter Agreements Takas Usulü Germany to become Turkey’s largest trading partner Overvaluation of TL – Continuing problem until 1980 1980 liberalization and reform brought an end to the policies initiated in 1930.

  24. Quota lists - November 1931 Agricultural and industrial machinery, raw materials, and medicine free Imports of processed food, alcoholic beverages, clothing, shoes, leather goods, some other consumer items eliminated

  25. Import licenses distributed administratively Economic rents to a limited number of favored importers and producers Priority to prevent large trade deficit To maintain surpluses on the trade account to finance debt service

  26. Result: Severe curtailment in the volume of imports Bilateral trade, clearing, and barter agreements during mid-1930s with German, the United Kingdom, France, & Italy A worldwide trend

  27. Bilateral trade agreements % 84 of imports & % 81 of exports Became part of the clearing and reciprocal quota systems in 1934-1939 The exception: the USA Turkey had a trade surplus against the USA

  28. Industrial output High rates of growth after 1929 Manufacturing industry averaged over % 15 a year Despite the contraction of rural demand arising from curtailment of imports

  29. By the end of 1930 Private industry primitive in character appropriating the rentsbrought about by the restriction of imports and protection of the domestic market

  30. A search for a new strategy Radical reorientation of economic policies Solution: Etatism State to participate in economic affairs A response to the Great Depression A common approach: Latin American countries Mixed economy & government intervention & balance of payments controls Tendencies toward autarky in several European countries The adoption of five-year planning in the Soviet Union

  31. Under etatism Foreign trade regime Balance of payments controls High tariff rates Quantity restrictions

  32. Recessionary Policy Control of domestic markets Direct or indirect price support policies (agricultural commodities) Prices of some industrial goods controlled Wages controlled in supported industries Interest rates in financial transactions and banking activities fixed by central authorities

  33. The most conspicious [remarkable] feature of Etatism The emergence of the state as a major producer & investor Most of the state monopolies, administered by private firms, transferred to the public sector Foreign-owned maritime transport companies and railroad, nationalized and transformed into state monopolies An important role in large-scale investment projects A Key factor in the development process: State economic enterprises (KİT)

  34. Five-year industrial plans drawn up Preparatory work in late 1932 with the help of Soviet and American advisers The plan adopted in 1934 A detailed list of the investment projects for the public sector Financing partly obtained abroad (Soviet union and the United Kimgdom) The First Five-Year Plan attained by 1938 The Second Five-Year plan, started in 1938, interrupted by the WWII

  35. Agriculture emerged as the leading contributor to growth under etatism Before etatism, public investment concentrated on transport & communications (railways) With etatism, public investment shifted toward industry, education & health, & agriculture Even so, more than half of public investment went into transport and communications. Investment in transport benefited agriculture

  36. Trade surplus 1930s Autarky – A practical necessity An autonomous industry 1929-1932 a period of searching Statism State took responsibility for creating and running industries Lack of accumulated capital in private sector Soviet delegation 1932 Concentration of textiles, iron and steel, paper, cement, glass and chemicals 1933 First Five-Year plan

  37. State Economic Enterprises - 1938 State intervention in agriculture 1932 To regulate prices by building up and selling off stocks Office for Soil Praducts 1938

  38. Three Components of Turkish Economic History 1923 – 1948 Economic Autarky and Statism National Economy 1948 – 1980 Liberalism and Planning Mixed Economy 1980 - 2006 Neo-Liberalism and Globalization Liberal Economy

  39. Transition to Democracy Wartime Developments Social Stata (Classes) 1. Peasantry 1945 :% 83 – 40.000 villages 1955: % 71 Small property: the dominant type 2. Industrial Workers – Working Class 3. Middling Strata: Landowners, Businessmen, Intellectuals

  40. Statism created capital and allowed accumulation in private hands Classes / strata differentiated Conflicts arouse Difficulty in maintaining social policy and statism General discontent Peasantry – The largest social group Living standard of peasantry deteriorated

  41. Villages confronted with following problems: 1.    Shortages of land 2.    Farming methods and techniques 3.    Large estates Distribution of national income unbalanced

  42. Measures necessitated by war: Industrialization in its initial stage possible only by exploiting internal markets chiefly the rural ones. Heavy taxes in agriculture& internal terms of trade favoring urban strata despite the removal of tithe (aşar)

  43. Two states organizations: 1. Office of Soil Products (Toprak Mahsulleri Ofisi) 2. Forestry Enterprise (Orman İşletmeleri) Aim: to help the peasantry

  44. Office of Soil Products 1938 1. To protect peasant through price supports 2. To accumulate farm supplies for army, schools, & needy regions

  45. 2. Forestry Enterprise (Orman İşletmeleri) a.    To exploit forests b.    To conserve existing ones c.    To reforest new areas

  46. Uneven distribution of burden when war broke out 1.    Sharp increase in consumption of soil products Army – from 120.000 to 1.500.000 No official mobilization Ministry of Defence budget % 30 to % 50 Tax increases Issuance of money – Printing money

  47. 2.    Diminution in agricultural production producers drafted into the army Shortage of bread The Office: authoritarian & unrealistic policy Uneven distribution of the burden

  48. Four legislations affecting Single-Party Era New wave of state intenvention 1. National Defence Law 1940 (Milli Korunma Kanunu) 2. Capital Levy 1942 (Varlık Vergisi) 3.Agricultural Products Law 1942  (Toprak Mahsulleri Vergisi) 4.Land Reform Law 1945 (Çiftçiyi Topraklandırma Kanunu)

  49. The etatist laws already provided the framework for a system of wartime controls 1. National Defence Law - January 1940 (Milli Korunma Kanunu) Extensive emergency economic powers Unlimited powers to: a) Fix prices b) Requisition materials (farm products) c) Impose forced labor (angarya)

  50. Crop prices established arbitrarily below the market prices to keep down cost of bread in cities to peasants’ detriment Price controls to mitigate the social effects of inflation Paradox: Fixing prices unrealistically low levels to combat inflation Stimulating inflation through monetary/budgetary policy Black market economy boomed Price controls relinquished

More Related