Chapter 10: Macro Policy Challenges for Turkey: Some Comments
Marco Buti, Max Watson, Pierre van der Haegen and Ricardo Hausmann 10.1 GROWTH AND STABILITY DURING CONVERGENCE: EXPERIENCES OF EU MEMBER STATES Marco Buti and Max Watson* 1. Introduction Enlargement is already bringing new sources of dynamism to the EU economy and the accession of Turkey holds great potential for extending this process into the future. The challenge for the EU is to put in place policies that realize the full beneﬁt of this and especially to accelerate economic growth. For Turkey, a diﬀerent challenge lies ahead: to prolong the phase of strong growth of 2004 and 2005 and make it truly sustainable. The experience of Turkey in recent years underscores the role of sound macroeconomic policies in this respect. Over the medium term, stability and growth go hand-in-hand and nowhere is this clearer than in economies that are dependent on external ﬂows and have a high public debt. In the short run, though, policymakers can face major tensions in designing policies to assure both stability and growth, not least at times of major transformation in the economy (see Table 10.1.1). How far do earlier EU experiences oﬀer guideposts in this regard, especially during periods of accession and economic convergence? Turkey is grappling with some challenges that have parallels with the experiences of a number of EU member states. It is embarked on a major transformation of the economy and adoption of the acquis communautaire. Like some, it has shifted from a ﬁxed to a ﬂexible exchange...
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