Impoverishing Economic Growth
"Speed is irrelevant if you are going in the wrong direction." (Mahatma Gandhi)
The Economic Growth Rate refers to the rate of change in the country's GDP (the economic equivalent of the products produced in the market) compared to the previous period. It is being measured on a percentage basis as a determinant of economic health and possible future growth in the country. Overall, a steadily growing GDP is a good sign of the health of the country's economy. Companies produce more goods and hire more people, which allows more money to flow through the economy. So far, so good, but it should be aware that faster growth is not always better if it is not sustainable.
When economists say the ideal GDP growth rate is between 2% and 3%, is it pleasing to grow fast? When we look at the history of economics, unfortunately, this scenario created a bubble that led to the recession when it burst. Also, if growth is too fast, at some point, it can lead to high inflation, so even in the United States, one of the countries with the highest economic growth, the Federal Reserve makes adjustments to interest rates to slow down when economic growth becomes aggressive. The fact that the supply and demand of imported goods are inflexible according to prices, the ratio of the production of import substitution goods to imported goods decreases, and the goods exported by the country are Giffen goods, causing an "impoverishing" growth. In other words, as growth accelerates, inflation increases, and people become poor. Sounds familiar, right?
When we look at Turkish economic history, the years when growth was more than 10%, were realized in 1966, 1976, 2011, and 2021. (*) During these years, the milestones showed the cost of economic growth to the public similar. In the process that started with the incentives of the Democratic Party to the agricultural sector between 1950 and 1960, in addition to providing support to many sectors, there was a period that ended with the political-economic crisis with the receipt of foreign financial aid and the use of loans. There were prosperity and peace like a false spring first, but when foreign aid and loans declined, there were devaluations, and the purchasing power of the people fell. The State Planning Organization (SPO), established in 1960, made and implemented five-year development plans. The first two plans, which lasted for ten years, aimed at "import substitution industrialization" and the production of previously imported consumer goods in the country.
In the 1970s, the "advanced import substitution model" was introduced. In this range, we started to produce our first washing machine, refrigerator, and car, albeit with mounting support. Interestingly, between 1950 and 1970, the Turkish economy sometimes grew even faster than the American economy.
The black period began in 1977; Between 1982 and 1994, with the emergence of a shortage of foreign currency, the Turkish economy and the people had to try to cope with all kinds of troubles. The crash of 1994 led to a crisis in 2001 that almost went bankrupt. The devaluations in 2011 and 2021 left their mark on the economy.
According to predictions, Turkey will be in the top 10 countries with the highest economic growth in 2030. The countries that have maintained their place in the top 10 list since 1970 are the United States, Germany, Russia, China, and Japan. These names are also unchanging in the predictions for 2030 and 2050. The fact that their economic growth is more stable and acceptable than high is the only fact that has not changed. Turkey's economy, which will be in the top 10 in 2030, is not in the top 10 in the 2050 list.
As it turns out, Turkey's economy may be showing impoverishing growth. If the pace of economic growth, cannot be brought down to a healthy rate; high inflation, high unemployment, declining purchasing power, and exchange rate volatility may continue. •
(*) (macrotrends.net)
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