MIDDLE INCOME TRAP PROBLEM IS STILL ON THE AGENDA

Seyfettin Gürsel, Ozan Bakış and Selin Köksal

Increase in labor productivity showed by far the greatest contribution to Turkey’s high economic growth rates before the global economic crisis (2002-2008). When high growth rates combined with the appreciation of Turkish Lira against US Dollar on a vast scale, the increase in dollar denominated GDP per capita recorded a great jump. Leaving the global economics crisis aside during which GDP decreased, employment rate and labor productivity almost equally contributed to GDP per capita increases during the years of strong exit from crisis (2010-2011). On the other hand, we know that Turkish Economy grew since 2012 between 2-4 percent after having implemented “balanced growth” policies in order to cope with deepening macroeconomic imbalances. This low GDP growth slowed sizably the increase of GDP per capita. During this period, we observe that labor productivity followed a fluctuating course in terms of GDP per capita contribution (first negative then slightly positive). Finally we would like to underline that, due to very limited increase in total labor productivity, the increase in GDP per capita remained very low in the last four years.

doc. researchbrief198

pdf. researchbrief198

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