Turkey: Greater Prosperity with Social Justice

These policy notes are intended as
background for initial discussions between the new
Government and the World Bank about the development strategy
for Turkey, and the possible support the World Bank could
bring to implement that strategy. This paper presents recent
work on specific sectors where action by the government
would be needed. The main points in each note are outlined
here: Strict fiscal management is key to full realization of
the twin objectives of low inflation and steady growth in a
setting of a gradually diminishing public debt burden. More
effective government is the road to permanent macroeconomic
stability and better delivery of public services under
conditions of fiscal austerity. Fighting corruption is
vital to ensuring that the government delivers effective
services. While extreme poverty (US$1 a day) remains very
low in Turkey, both urban food poverty and economic
vulnerability are significant and have grown recently.
Turkey has made unprecedented strides in the basic education
program launched in 1997. Now the twin challenges are to
increase gradually the share of GDP dedicated to education
while still accepting that not all improvements in education
can be afforded at once. Turkey ranks far behind most middle
income countries in terms of health status. To meet the
objective of improving the health status of the population,
fundamental and systemic changes will be required in the
ways that health care is financed, organized, and managed.
Revitalizing the economy and further improving
competitiveness require continued attention to the financial
sector. Business was badly affected by the 2001 crisis,
and although now exhibiting signs of growth, requires
selective assistance to recover fully with the ability to
compete in the future. Small and medium-sized enterprises
(SMEs) should drive the creation of productive employment
opportunities. Accelerating privatization is important for
strengthening the credibility of the reform program and for
supporting private sector development. Turkey is highly
vulnerable to natural disasters, especially earthquakes and
floods. Effective mitigation and preparedness can
significantly reduce the risk of large economic and social
costs. In recent decades, agriculture and other rural
economic activities have failed to live up to their
potential as contributors to growth, rural employment, and
rural welfare. Telecommunications can be an important driver
of technological change and economic growth for Turkey.
transformation of the electricity and gas sectors to
competitive private energy markets aims to decrease costs
and risks currently borne by the government by attracting
private capital. Increasing the efficiency of Turkey's
transport sector will contribute to economic growth,
environmental sustainability and poverty alleviation.
Effective decentralization through greater empowerment of
municipalities is key to improving services. Reform of the
administration of justice will help ensure that justice is
not denied by being delayed. Bringing civil society into
development decisions will lead to more effective
implementation of programs and meaningful results. A greater
emphasis on transparency and participation must be combined
with more readily available and consistent information.