Turkey's economy serves as a model for developing countries

There are many questions up in the air for Turkey, who is looking to grow and develop. Turkey looks to achieve this growth and development through their 10th five-year development plan that encapsulates a growth model, which is based on technological efficiency and prioritizes an open economy as required. Turkey is becoming an example for other developing countries as to what development model to adopt under conditions of open economy. Turkey's economic plans, which were put into effect three years after the 1960 military coup, were based on saving-investment equality from the traditional Keynesian growth theory. They established mechanical relationships among production factors that cannot be maintained theoretically even in national and closed economies. As they were composed of statist applications that were developed after the 1929 crisis, these models cannot be implemented in dynamic and outward-oriented economies. There actually was never a consistent growth and development model constructed for developing countries in the whole of the 20th century, which was dominated by inward-looking nation- states that had high barriers to entry. The case is the same today as it was back then even though these economies are now open to the outside world. Now the question is how will sustainable growth be provided without full employment.

There are three main models/studies being taken into consideration for Turkey. The first idea being that of Paul Romer and his 1986 article "Increasing Returns and Long Run Growth". Here, Romer was using a model that was founded on increasing yields, instead of a neoclassical production function. Rather than the material product, Romer used manufacturing knowledge as the baseline. Piero Sraffa in his study called "Production of Commodities by Means of Commodities" challenges Romer's article and raises the question of what would be the basic foundations of Romer's new growth strategies, which were based on human capital and supported by active policies? The answer was that developing countries should disturb the Malthusian equilibrium and develop dynamic economies of scope, instead of gaining a comparative advantage as suggested by the Ricardian model.

Another simple model is that was modeled by Young 1991. There are two countries symbolized as A and B; A specialized in producing technology-intensive goods and B specialized in traditional goods and they apply Ricardian trade. Here, A achieves geometrical growth, while B recedes, as Young suggests that there is learning potential in hitech goods. Thus, as Malthus asserts, country A, which continues with technology-intensive goods, will achieve a geometrical growth with a high degree of efficiency, although its population and requirements increase geometrically. However, while the population and requirements of country B geometrically increase, its income (productive growth) will increase arithmetically. In order to have Malthusian equilibrium, country B has to choose poverty by adopting an oppressive model. That is what Turkey is going through now. Turkey will serve as a model for other countries on how to do it right, or what not to do after they implement their tenth five-year development plan that will be applied between 2014 and 2018.

http://www.dailysabah.com/columns/taha-meli-arvas/2014/08/27/turkeys-economy-serves-as-a-model-for-developing-countries