Turkey, export miracle or accounting trick?

Abstract

Turkey's recovery from its debt crisis ( 1978 - 80 ) has made it the paragon of export led growth. The driving force behind the Turkish export miracle has remained a matter of debate. If what happened in Turkey was a spillover of its proximity to the Middle East, there is little other countries can learn from the Turkish experience. If active export subsidies were the main determinants of Turkey's export growth, one wonders about the costs of joining GATT. The last possible explanation, real exchange rate depreciation, would put the focus much more on the macroeconomic policies and trade reforms that made such a depreciation sustainable in real terms. The authors provide an assessment of the relative contributions of all the factors mentioned above and their relationship to Turkey's export growth. They begin with an assessment of whether there was an export miracle once the Middle East is discounted, or was it all a product of accounting tricks in response to changing incentives? In Section II, Turkey's trade statistics are compared with those reported by its main trading partners to assess whether there was significant growth to countries outside the Middle East. Finally, the authors present a simple model which focuses on the role of export incentives, relative prices and foreign income growth in export determination. The authors conclude by confirming the existence of the Turkish export miracle.

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