Kemalhan Aydın 21802457 ECON – 363 HOMEWORK 2

Figure.1 (1870 – 1914)

Turkey

Turkey's place in the graph is shown with a red dot. Turkey's growth per capita was
0.8 percent annually, and GDP rate per head was 850 – 1200 U.S dollars. As it can
be seen in Figure 1, there is no convergence in terms of Turkey. There are several
reasons why this happened. First of all, Turkey's labor force during those days is
mostly employed in the agriculture sector. According to the paper, 30 to 75 percent of
the labor force is in the farming sector, making this sector the largest one. However,
today it is not the biggest sector (Altuğ,2008,1-2). As shown in Table 2 of the paper,
the share of agriculture in GDP was 54 percent. Even there was no official data of
Ottomans that kept records of share of industry in GDP (Altuğ,2008,24). Turkey was
not able to manage the process of industrialization well. That is why the
manufacturing sector in Turkey cannot grow as other countries in Europe. Since
there are little manufacturers, Turkey was not able to export value-added more.
Before World War I, Europe created a big gap because of the substantial
industrialization (Altuğ,2008,4). Also, we should consider that in Ottoman between
1880 – 1913, there was a failure in terms of military and diplomacy that shaped the
economic developments in the Ottoman Empire. (Altuğ,2008,5) Between 1880 –
1913 Turkey's annual growth rate per capita was 0.8 percent. The annual growth of
output was 1.48 percent. Moreover, 22.7 percent of growth came from technological
advancements, a small number (A). Also, the contribution of labour (L) to the growth
was 0.44, and the contribution of capital (K) was 0.71, which is very small, and we
cannot claim that capital accumulation was higher in those years (Altuğ,2008,24).
Kemalhan Aydın 21802457 ECON – 363 HOMEWORK 2

Figure.2 (1914 – 1950)

Turkey

Turkey's growth rate per capita was 0.8 percent, and GDP per head was between
1200 – 1620 U.S dollars annually. When we look at the years between 1914 and
1950, we can see a partial improvement. We should divide these years before and
after 1929. Between 1913 – 1929 there was a decrease in output, labor, and capital.
The root cause of this decline was World War I since the population
declined dramatically in Ottoman which influenced the labor force (Altuğ,2008,3).
Output declined 0.72 percent, labor declined 1.31 percent, and capital declined 0.03
percent (Altuğ,2008,24). As asserted in the paper, after 1929, we have witnessed a
change in the regime of Turkey, which affects GDP positively because
of innovations (Altuğ,2008,5). The contribution of labor also increased from 0.44 in
1880 – 1913 to 1.16 in 1929 - 1950. (Altuğ,2008,24) Between 1929 and 1950, there
was a big improvement in human capital. Literacy was one of those government
elite's main concerns, as they have profoundly tried to solve it. We see 2.77 percent
output growth, 1.93 percent labor growth, 1.82 percent capital growth, and 6.75
human capital growth annually. (Altuğ,2008,24) Especially the effect of growth in a
human capital way very crucial for the growth. Also, we are starting to
see productivity growth in agriculture. In figure 1, Turkey converged to its
steady-state level and closed the gap between European countries and him. One can
also claim that this is because of the European countries' GDP decline in World War
II. Since Turkey did not engage in that war, its population did not decline. When we
look at technology transfer, there is an increase in the contribution of technology to
grow. It was 22.7 percent between 1880 and 1913 but 31.9 between 1929 and 1950.
Kemalhan Aydın 21802457 ECON – 363 HOMEWORK 2

In addition, the contribution of technology growth to the growth was negative between
1913 – 1929, but Turkey successfully made it 40 percent more in the next 20 years.
We cannot see a noticeable change in terms of capital accumulation when we
compared 1880 – 1913 and 1913 – 1950 (Altuğ,2008,24).
Figure.3 (1950 – 1975)

Turkey

After World War II, there was a huge acceleration in GDP per capita and GDP growth
rate per capita in Europe. Between these years, Turkey's GDP per capita was 1620 –
4020 U.S dollars, and its growth per capita was 3.1 percent. (Altuğ,2008,Table 2)
Although there is an increase in GDP for all countries, including Turkey, we should
look at why Turkey could not converge enough. In terms of capital accumulation,
there was a remarkable increase. It increased from 0.73 to 2.52. In contrast, there
was no remarkable change in labor. However, the contribution
of technology increased from 0.89 to 1.27, and it increased 0.33 to 1.27 if we look
from the 1880 – 1913 period. In table 2, we see a decrease in the share of agriculture
in GDP from 54% to 26%. Also, the share of industry in GDP increased from %13 to
%21. In addition, %30 percent of the labor force moved to industry from
agriculture. (Altuğ,2008,Table 2) Similarly, when we look at the sectors, the non-
agricultural sector doubled the agricultural sector's contribution to output. As asserted
in the paper, Turkey's slow movement from agriculture to industry is the biggest
reason why he could not converge. (Altuğ,2008,11) Even in 1950 – 1980,
investments in the agriculture sector were higher. As we can see from the data when
the labor force moved to the non-agricultural sector, it created more output, and
Kemalhan Aydın 21802457 ECON – 363 HOMEWORK 2

therefore we saw more GDP per capita compared to the past. Other countries in
Europe have already moved their population to the industry. The paper stated that
Turkey has the highest share of the population still employed in agriculture even
in 2005. (Altuğ,2008,12) Finally, the contribution of technology to growth in Turkey is
historically small. There was only an increase in productivity between 1950 – 1980 in
the manufacturing sector since Turkey removed the old techniques, bought the new
machines, and gave importance to it rather than agriculture. (Altuğ,2008,11)

Works Cited
Altug, S., Filiztekin, A., & Pamuk, Ş. (2008). Sources of long-term economic growth for
Turkey, 1880–2005. European Review of Economic History, 12(3), 393-430.

Persson, K., & Sharp, P. (2015). An Economic History of Europe: Knowledge, Institutions
and Growth, 600 to the Present (2nd ed., New Approaches to Economic and Social History).
Cambridge: Cambridge University Press. doi:10.1017/CBO9781316155233