THE REQUIREMENTS OF FOREIGN BORROWING AND TWO-GAP THEORY: A CASE OF TURKEY

Year 1997, Volume: 15 Issue: 2, 1 - 32, 31.12.1997

Ömer Eroğlu Stephen Heycoock

Abstract

This
study has examined empirically the need 
of foreign borrowing. and foreign debt burfien
of Turkey from 1963 to 1995. The two-gap analysis was used to assess the requirements of foreign resources
as additional to domestic resources in order to achieve e a reasonable
target
ground rate of national income. This study
has shown  that in the light of two-gap analvsis, foreign
aid will still continue to plan a crucial role during the Seventh Five Year Plan period (1996-2000) bv helping to overcome
foreign exchange constraints, although it has put Turkev under a large foreign
indebtedness. However, as long as the economy
keeps its ability to repav foreign debt, it is
beneficial for the economic development of Turkey.

Keywords

Economy, foreign Aid, Foreign Debt, Two-Gap Analysis, Foreign Exchangeange Coııstraints

References

• Celasun, M. and D. Rodrik 81989), "Turkish Experience with Dept: Macroeconomic Policy and Performance", in Devloloping Country Debt and the World Economy, ed. by J.D. Sachs, National Bureau of Economic Research, The University of Chicago Press, London