Economy

The Right Track

The 10th Development Plan

In line with the bold 2023 Vision, the 10th Development Plan will take Turkey up to 2018 and has a number of key targets.

The 2023 Vision is a list of goals to be achieved by the 100th anniversary of the Republic of Turkey. In line with this vision, the Ministry of Development of Turkey has established a roadmap for the 2023 goals with a midterm strategy entitled the 10th Development Plan. This plan covers 2014-2018 and is crucial for the overall realization of 2023 targets.

For the planning period, the plan projects an 5.5% annual average real growth rate that would lead to a GDP of $1.3 trillion and a GDP per capita of $16,000 by 2018. Exports are expected to growth to $277.2 billion, while the unemployment rate will decline to 7.2% by 2018. The ratio of the current account deficit (CAD) to the GDP is also expected to decrease to 5.2% and the inflation rate to 4.5%.

The government targets putting Turkey among other high-income economies, developing more accessible and improved public services, reducing regional development disparities, and having competitive cities with a high standard of living that will ultimately provide a happier, more prosperous, and more dignified life for its citizens. The economic policy created by the government targets all sectors of the economy.

To sustain the growth targeted by the government, several investments are being made by the Turkish government. The energy sector needs heavy investment to achieve an installed electricity capacity of 78,000 MW by 2018. In line with that, the government has allocated $50 billion to diversify Turkey’s power generation, between 2015-2018, with allocations for different energy sources such as nuclear ($11 billion), coal ($10 billion), and natural gas ($5 billion). Hydroelectricity alone, which already represents 25% of total energy generation in Turkey, is expected to receive a $16 billion of that investment.

An important part of Turkey’s strategy to achieve a GDP per capita of $16,000 by 2018 requires investment in human capital. The plan intends to increase the enrollment rate in tertiary education and increase the average level of schooling; however, it is also a priority to boost women’s participation in labor markets to fully benefit from the demographic. Currently, the female labor participation rate is around 30%, while the OECD’s average stands at 65%. By 2018, Turkey targets a rate of 34.9%. For that, the government has prioritized the creation of 4 million new jobs in the 10th Development Plan, especially for women and young people. Programs have been put into place, including in partnership with international organizations such as the World Bank, which collaborate in Turkey’s Active Labor Market Programs (ALMPs).

As Economy Minister Nihat Zeybekçi stated, Turkey has achieved much economic development through manufacturing; however, it won’t be able to reach its 2023 vision if it doesn’t focus on added value production and R&D. That would allow Turkey to boost its GDP and narrow its CAD. Aware of that, the government aims to increase the rate of R&D expenditures to 1.8% of the GDP while the private sector’s share should be 60% of it. That will increase manufacturing industry exports and, most importantly, the share of medium-high and high technology sectors in exports.

The 10th Development Plan also includes a “livable places, sustainable environment” section. This outlines government plans regarding housing, traffic, use of natural resources, and the strategy to reduce regional development disparities. Municipalities are expected to take an active role in this section as ensuring access to wastewater services to 80% of the population and sanitary landfills to 85% of it.

Turkey has a clear vision of where it wants to stand when celebrating the 100th anniversary of the Republic of Turkey. The strategy behind it is done step by step and the 10th Development Plan is expected to put Turkey on the right track to achieve its goals.

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