COMPARISON OF

MACROECONÓMIC PERFORMANCE
OF TURKEY AND EAST ASIAN
COUNTRIES, AND AN ECONOMETRIC
ANALYSIS OF ECONOMIC GROWTH
IN TURKEY

VIKTORIIA KOZACHENKOVA,
FINAL INTERNATIONAL UNIVERSITY,
2023
The study in question suggested that these
were the basic structural characteristics of high
performing East Asian economies such as
Singapore, Taiwan, Malaysia, South Korea and
others.

1. Introduction
A World Bank study about the most important factors
responsible for the relatively fast growth rate experienced by
East Asian economies listed the following six factors (World
Bank, 1993):

a) High Savings Rates

b) High Investment Rates
c) High Ratios of Export to GNP and Export oriented Growth
Policies
d) Allocating capital to high-yielding investments and
catching-up technology of the
These factors are complementary for each other and in a sense,
they formed a recipe for high growth; high levels of financial
savings are necessary for high investment levels.

Allocating capital to high-yielding investments and catching-up

technology of the industrial economies is the main mechanism
through which new technologies are adapted and productivity is
increased.

The competitive nature of markets puts pressure on particularly

manufacturing and service sectors to decrease costs and increase
efficiency.

Investment in education increases the size of skilled labor force

which is essential for the structural transformation of the
economy into high-technology oriented production.
On the other hand, export-oriented growth strategy is critical
for various factors, all of which help to reach a sustainable
and relatively high rate of economic growth in the long- run.
The first one of these is the ability to sell in global markets
which have potentially unlimited capacity of demand to
absorb the products coming from particularly small
developing countries

Second, the competitive nature of global markets puts pressure on

domestic firms to be cost- efficient. In other words, survival of exporting
firms in the long-run critically depends on continu- ous adoption of latest
technologies and management practices so as to lower costs and increase
productivity. Finally production for global markets not only allows
domestic firms to take advan- tage of economies of scale but also reduce
their vulnerability to fluctuations in domestic demand for their products
particularly in case of worsened macroeconomic stability.
In particular we test the following hypotheses for Turkish economy
using an- nual data for theperiod of 1980-2001:

a) Hypothesis 1: Higher domestic saving rate positively affects growth rate of real GNP.
b) Hypothesis 2: Higher domestic investment rate positively affects growth rate of real GNP.
c) Hypothesis 3: Higher growth rate of exports positively affects growth rate of real GNP.
d) Hypothesis 4: Higher volatility of export growth negatively affects growth rate of
real GNP.
e) Hypothesis 5: Higher volatility of savings negatively affects growth rate of real GNP.
f) Hypothesis 6: Higher volatility of inflation rate negatively affects growth rate of real GNP.

The rest of the paper is organiged as follows: In section two, we present comparative data
about growth performance, inflation rate, domestic saving and investment rates, and export to GNP ratios of
Turkey and selected East Asian economies for selective years and sub-periods
 Table 1
Growth Performance of Turkey and selected East Asian Countries *
1980-85 1986-90 1991-95 1996-2001

Turkey 3.5 5.8 3.3 1.7

Malaysia 5.6 6.8 8.7 4

Indonesia 5.5 6.5 7.1 1.4

Korea 6.5 10.1 7.5 6

China 9.6 8 12 8.1

Table 2
Average Annual Growth Rate for 1980-2001*
Turkey 3.6
Malaysia 6.3
Indonesia 5.1
Korea 7.5
China 9.4
Asian countries as a group 7.1

*Percentage change in real GNP

 Table 3

Domestic Investment and Domestic Saving Rates of Turkey and East Asian Countries *
Investment /GNP Savings/GNP
Turkey East Asian Countries Turkey East Asian Countries
1980-84 20 30.6 16.9 30.3
1984-89 23.2 31.7 22.8 35.1
1990-94 24.1 36.1 22.2 34.8
1995-99 24.4 33.7 21.4 31
1980-99 23.9 33 20.8 32.8

Inpercentage terms
Table 4
The Share of Exports in GNP*
1990. 1991. 1992. 1993 1994 1995. 1996. 1997. A.V.**
Turkey 8.6 9 9.3 8.6 14 12.8 17.6 16.8 12.1
Malaysia 70.4 73.8 72.1 75.8 82.6. 86.3 81.4 83.9 78.3
Indonesia 26.6 24.2 25.4 25.8 25 25.8 24 28.7 25.7
Korea 25.1 24.1 24.9 24.8 25.1 27.5 27.1 31.7 32.4
China 13.5 14.7 14.8 12.6 18.8 18 18.1 19.9 16.3

* In percentage terms
** Annual average of 1990-97 period
 Table 5
Inflation Rate *
1990 1991 1992 1993 1994 1995 1996. 1997. 1998
Turkey 60.3 66 70.1 66.1 106 89.1 80.4 85.7 84.6
Malaysia 2.6 4.4 4.8 3.5 3.7 5.3 3.5 2.7 5.3
Indonesia 7.8 9.4. 7.5 12.5 9.6 9.4 8.0 6.7 57.6
Korea 8.6 9.3 6.2 4.8 6.2 4.5 4.9 4.4 7.5
China 3.1 3.5 6.3 14.6 24.2 16.9 8.3 2.8 -0.8

* Annual percentage change in consumer price index

in
In this presentation, we have compared the growth performance of Turkey with that of the
four relatively faster growing East Asian economies and attempted to see whether the
differentials in economic
growth are correlated with those of the domestic saving and investment rates, and the
respective shares
of exports in GNP of these countries. The data clearly showed that these four countries,
namely Malaysia, Indonesia, Korea and China have systematically saved and invested
relatively larger fraction of
their national outputs and relatively larger percentage of their outputs was exported
 Conclusions

Turkey and East Asian countries have experienced different

macroeconomic performances over the years. East Asian countries such
as Japan, South Korea, Taiwan, and Singapore have shown impressive
economic growth rates over the past few decades, while Turkey has
experienced more volatility in its economic performance.

One of the key factors contributing to the economic success of East Asian
countries is their focus on export-oriented growth. These countries have
invested heavily in their manufacturing and technology sectors, allowing
them to become major players in the global market. In contrast, Turkey has
relied more on domestic consumption to drive economic growth, leading to a
higher level of economic volatility.