The World Bank's Strategy in Turkey: 2008-2011
Turkey's economic development has global significance, given its size, role as a regional power, and strategic location, bridging East and West. Turkey is a member of the Organization for Economic Co-operation and Development (OECD), and the prospect of European Union (EU) accession remains a key anchor of political and economic reforms. Turkey, with a population of 70.6 million, is one of the large middle-income partners of the World Bank Group (WBG).
Turkey is the largest borrower in the Europe and Central Asia Region and it has been the third largest World Bank borrower in terms of new commitments of over US$1.5 billion during the last three years. Turkey is currently IFC's fifth largest exposure after Russia, India, China and Brazil. As of September 2007, IFC's committed portfolio totaled US$1.6 billion.
Executive Summary
Full Report
Full Report (in Turkish)
Annex 1, 2, 3, 4
Technical Annexes
Country Context
Turkey has one of the world's 20 largest economies. Gross Domestic Product (GDP) reached US$400 billion, and GDP per capita reached around US$5,500 in 2006, following a spectacular recovery from a deep economic crisis in 2001. Turkey has succeeded in reducing poverty, from about 28 percent of the population in 2003, to about 18 percent in 2006, pulling more than 7 million people out of poverty. Fewer than 10,000 people, or less than 0.01 percent of the population, are extremely poor, living on US$1 or less a day. At the same time, some social indicators lag behind those of countries with similar incomes.
Turkey's Vision and Key Development Challenges
Turkey's vision for development, set out in its Ninth Development Plan 2007-2013 , is "a country with an information society, growing in stability, sharing more equitably, globally competitive and fully completed her coherence with the European Union." In achieving this goal, Turkey can build on a track record of six years of stabilization, rapid economic growth, and declining poverty.
The World Bank Group's Program
The goal of the new Bank Group Country Partnership Strategy (CPS) for FY08-11 is for the Bank Group to be a partner with Turkey in realizing her development vision-to achieve fast and sustained growth with equity-through full integration into the Government's formulated development strategy. Accordingly, the CPS is shaped directly by Turkey's Ninth Development Plan and by the Government's Program and aims at contributing to three main development pillars: (i) improved competitiveness and employment, (ii) equitable human and social development, and (iii) efficient provision of high-quality public services .
Managing Risks
Turkey's economic program and its Bank Group support continues to entail non-negligible risks. The main risks factors include: (i) political economy risks-where the most important remaining political risks (after resolution of the political uncertainties before and after the 2007 elections) relate to the process of constitutional reform and the border tensions with Iraq, with the EU accession anchor expected to remain a major unifying force behind political and economic reforms and to continue mitigating risks; (ii) external vulnerabilities-where investors will observe the development of Turkey's large current account deficit and reliance on capital inflows, and where maintaining satisfactory macroeconomic performance and continuation of structural reforms will be the key to mitigating external financing risks; (iii) risk of natural disasters-where Turkey is one of the most vulnerable countries to natural disaster but continues to invest substantially in preparedness and mitigation; and (iv) reform implementation risks-where social consensus on the reform program and sufficient institutional capacity are needed for the implementation of the CPS, and which itself includes a host of planned activities that help promote such consensus and help build the requisite capacity.
Conclusion
As of January 2008, Turkey enjoys a combination of political and economic stability, with a single-party government with broad public support and a clear mandate, an overall still favorable global economic environment, prospects of EU accession, and favorable long-term population dynamics. These circumstances provide Turkey with an historic opportunity, by continuing its strong economic policies and programs, to achieve sustained high income growth and better lives for the Turkish people and, over the medium term, approach the levels of income and development in other OECD countries and in the EU. This CPS aims for the WBG to be a partner with Turkey in realizing this opportunity.