Turkey on threshold of becoming a high-income economy, but challenges remain: World Bank

ISTANBUL

DAILY NEWS Photo

Steady growth over recent decades has brought Turkey to the threshold of becoming a high-income economy, prosperity has been broadly shared across income groups, and the size of the middle-class has doubled, according to a new World Bank report, “Turkey’s Transitions: Integration, Inclusion, Institutions.” However, challenges remain, the report stressed.   

“With a per capita income of around $10,500, Turkey is just a few years away from crossing the threshold of becoming a high-income economy, if past growth rates are sustained. Turkey’s economic rise has attracted attention, and this book is an account of how this success was achieved and what lessons other countries can learn from it,” Laura Tuck, World Bank Vice-President for Europe and Central Asia, said on the occasion of the report launch on Dec. 10.

According to the report, Turkey’s economic integration, both in terms of the country’s integration into advanced global markets and the integration of underdeveloped regions in Turkey’s economy, has been a driver for economic progress. Moreover, Turkey used the opportunity of deep financial crisis over a decade ago to reform its banks and public finances, allowing public expenditure to move from debt service to public service. In addition, economic progress has been socially inclusive, as poverty has been reduced by more than half, and access to high-quality health, education, and municipal services has expanded.

However, the report emphasized that in spite of its remarkable achievements so far, Turkey has still yet to establish the institutional prerequisites of a high-income economy. In a less forgiving global economic context, the risk of the so-called “middle-income trap” looms for countries that step back from their reform efforts. It said that for Turkey to complete the transition to a high-income economy, improvements in the rule of law, public accountability and transparency, and in the climate for entrepreneurship and innovation, will be needed.

“Turkey is undergoing multiple transitions en route to becoming a high-income economy, some more advanced than others. We hope Turkey’s experience inspires policy makers in other emerging markets to aim for high-income status,” said Martin Raiser, the World Bank’s country director for Turkey and the primary author of the report.