Productivity, Demographics, and Growth in Turkey: 2004-12

Year 2014, Volume: 3 Issue: 1, 23 - 56, 01.01.2014

Murat Üngör M. Koray Kalafatcılar

Abstract

Among all the OECD countries, Turkey had the second-highest average annual GDP growth (measured in constant local currency) and the fifth-highest average annual growth of purchasing power parity (PPP)-adjusted per capita income between 2004 and 2012. We study the sources of this high growth era, comparing Turkey with other OECD countries and breaking down GDP per capita into three components: labor productivity, the ratio of employment to the working-age population, and the ratio of the working-age population to the total population. Our findings suggest a productivity-based growth era in Turkey before the global crisis and an employment-based one in the post-crisis period. We then provide a detailed analysis of contributing factors to notable aspects of this economic expansion: the role of capital deepening and higher total factor productivity (TFP) in aggregate output per worker growth; and the rise in female employment, especially in the service sector.

Keywords

Demographics, growth, productivity, Turkey

Thanks

The preliminary results in Section 3 of this study are presented in Üngör and Kalafatcılar (2013). The authors are grateful for comments and suggestions from the editor and the two referees. The views expressed in this paper belong to the authors only and do not represent those of the Central Bank of the Republic of Turkey.

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