Synopsis. Challenge. More Results. Turkey-Sustained and Equitable Growth for Continued Economic Success

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1 Turkey-Sustained and Equitable Growth for Continued Economic Success Turkey Sustained and Equitable Growth for Continued Economic Success Synopsis Turkey is one of the greatest success stories of the global economy based on its rapid economic growth and development over the last decade. Extreme poverty has been eliminated; the Millennium Development Goals for maternal mortality and universal primary education have been achieved; and Turkey is working towards reaching the remaining goals by Turkey's partnership with the International Bank for Reconstruction and Development (IBRD) is focused on sustained and equitable growth and has delivered results on macroeconomic stabilization, the development of a clean, sustainable, and reliable energy sector, and improved health outcomes. Full Brief 6 Pages Sustained and Equitable Growth for Continued Economic Success PDF Challenge MULTIMEDIA Turkey is an upper middle-income country, and with a GDP of US$ 875 billion, it is the world's sixteenth-largest economy. Total population is 75 million and per capita annual income is just above US$ 10,000. Since 2001, Turkey has stabilized its economy and other countries most notably those in the Middle East and North Africa look to Turkey's political and economic system as a potential model to emulate. Accession to the European Union (EU), initiated in 2005, remains a firm long-term aim. Turkey's overall development goal is to become MORE one of the world's 10 largest economies by All Results Videos the 100th anniversary of the founding of the Turkish Republic. The Government's 2023 vision aims for a gross domestic product of US$ 2 trillion; a foreign trade volume in excess of US$ 1 trillion; per capita income to reach US$ 25,000; and unemployment to decline to 5 percent. Turkey also aims to complete full membership negotiations with the EU. To reach these goals they face the More Results

2 challenges of maintaining robust growth and generating employment, particularly amongst women and youth. Turkey also aims to maintain macro-economic stability, raise domestic savings, and increase private investment. The Government also seeks to improve public services. Expanding pre-school education and promoting early childhood development is a key Government priority, and in the healthcare sector, the Government faces issues of efficiency, governance and service delivery. Other objectives include increasing decentralization, strengthening governance, improving service delivery and promoting regional development. Sustainable management of natural resources and the protection of nature are growing in importance as long-term challenges. Turkey seeks to develop an increasingly reliable and efficient energy supply while seeking to mitigate climate change. With the highest rate of urbanization in the region, especially in secondary cities, Turkey faces great challenges in ensuring sustainability of its urban areas, in particular those that are prone to disasters such as earthquakes and floods. Approach The envisaged partnership between Turkey and the World Bank Group for has three main strategic themes: enhanced competitiveness and employment; improved equity and public services; and deepened sustainable development. The World Bank-Turkey partnership will help promote: 'Enhanced Competitiveness and Employment' through: (i) support for the adoption and implementation of the National Employment Strategy currently under preparation with Development Policy Loan (DPL) financing and analytical and advisory activities (AAA). The aim is to enhance productive employment, particularly the activation of low-skilled youth and women into formal employment and the expansion of employment activation programs, focused on skills upgrading; (ii) support for investment and business environment reforms and the completion of the review of the 96% percentage of total population with health insurance 70% rate increase in electricity transmission since 2002 MORE INFORMATION Turkey Country Partnership Strategy Turkey Country Economic Memorandum (CEM) 2010 on Informality: Causes, Consequences, Policies Improving the Quality and Equity of Basic Education in Turkey: Challenges and Options The World Bank in Turkey Undersecretariat of Turkish Treasury Ministry of Development Ministry of Economy Turkish Grand National Assembly Prime Ministry Ministry of Finance national competition policy framework; and, (iii) provision of medium and long-term funding to Small and Medium Enterprises (SMEs) and exporters. 'Improved Equity and Public Services' through: (i) increasing financing for early childhood education (ECE); (ii) strengthening the Ministry of Health's stewardship functions (not its role as service provider); (iii) the development and implementation of the private sector gender equity certification program; and, (iv)analytic and advisory work on state-owned-enterprises (SOE) governance. 'Deepened Sustainable Development' through: (i) policy advice and financing to address energy, environmental and climate change challenges in a more integrated manner; (ii) support for the completion of a water basin management strategy; and (iii) analysis, advice, and investment financing, by IBRD and IFC, for the Sustainable Cities Program, which is grounded in Turkey's Integrated Urban Development Strategy and Action Plan 'Sharing Turkey's Experience Results, Knowledge and Capacity' is a dimension of the CPS that cuts across all three objectives. Turkey and the World Bank are exploring avenues to collaborate in sharing Turkey's successful economic and social reforms. Two areas of particular focus include: health sector policy, reform, and performance; and disaster prevention and mitigation. The WBG intends to use its global network to work with Turkey in sharing these experiences and successes with a wider international audience.

3 Results Sound macroeconomic policies that enable resilient growth and poverty reduction. Solid fiscal and debt management, consistent monetary and exchange rate policy, and overhauled banking regulation and supervision have driven growth, improved social outcomes, and cut poverty: growth averaged nearly 7 percent, cutting poverty to 17 percent from 27 percent. Growth resumed rapidly after the global crisis, at 9 percent in 2010 and 10.2 percent in the first half of Gross public debt as a share of GDP fell from 73.4 percent of GDP in 2002 to around 40 percent in 2011, in spite of a sharp increase in 2009 during the global financial crisis. Turkey was able to respond to the unfolding global financial crisis in 2008/09 with both discretionary fiscal stimulus (1.2 percent of GDP) and aggressive monetary expansion (interest rates cut by more than 10 percent) due to solid buffers built in the years before. A clean, sustainable and reliable energy sector. Turkey s energy sector is increasingly transparent and reliable, and is more secure for industry development: From 2002 to 2011, electricity transmission increased by 70 percent, and during peak capacity there was a nearly 30 percent increase from 21GW to 33.78GW. An estimated additional 4.6 million households receive improved power supply through transmission expansion and upgrades from The reliability of electricity supply nearly doubled. There were 12,675 hours fewer electricity interruptions in 2008 than in Electricity produced from privately-owned renewable generation facilities more than doubled from Turkey has transformed its health system in under 10 years. Over 96 percent of the population has health insurance and the roll out of Family Medicine completed in December 2010 improved patient satisfaction and access to health services across the country. Average patient satisfaction in family medicine provinces rose from 69 percent in 2004 to 86 percent in A child in Turkey is nearly three times more likely to live beyond the age of five than in Turkey is on target to achieve MDG Goal 4 ("Reduce Child Mortality") by A mother is five times less likely to die in childbirth than in 1990; the maternal mortality ratio in 2008 was 19.4 deaths per 100,000 live births and in 1990 it was 100 deaths per 100,000 births. This means that Turkey has already achieved MDG Goal 5 ("Improve Maternal Health"), originally due by Bank Contribution Turkey and the IBRD are working as partners to address development challenges. IBRD s role is mainly catalytic, as its finance and analytic and advisory services account for a small fraction of Turkey s total external financing and demand for analytical and advisory support. At the same time, Turkey is one of IBRD s largest five borrowers. The Country Partnership Strategy for FY12-15 provides for up to US$ 4.45 billion in financing. As of mid January 2012, IBRD s lending portfolio consisted of 14 active projects with total net commitments of US$ 5.6 billion. The investment portfolio supports financial and private sector

4 development (37 percent), urban development (23 percent), the energy sector (32 percent), transport (3 percent), health and education (3 percent) and agriculture and the environment (2 percent). The World Bank s technical analysis, advice and assistance are carried out with the Government and a broad range of stakeholders. Major analytic tasks have focused on longerterm structural and institutional issues including investment climate, innovation, informality, savings and growth, public expenditures, equality of opportunities, female labor force participation, youth employment, labor taxes, vocational training for the unemployed, gender equity certification, basic education, early childhood education, health financing and food safety. The Government also seeks policy advice from the World Bank on issues such as employment, social security and health reforms. Partners Strong working relations with civil society are an important part of the Turkey-World Bank partnership. Academia, think tanks, private sector associations and businesses, as well as non- Governmental organizations (NGOs), are engaged in the analytical and policy work the World Bank undertakes with the authorities. A recent example is analytical reports focusing on female labor force participation and inequalities of opportunities, which have been widely discussed with academia, NGOs and private sector participants. The European Commission is also an important partner in Turkey. With its delegation in Ankara, seven thematic working groups have been established to support the Government s sector strategies as effectively as possible. The IBRD has a strong partnership with the United Nations, especially with UNICEF and the UN Development Programme (UNDP). A Welfare Monitoring Survey, which assesses the impact of the economic slowdown on household welfare, was conducted with UNICEF. UNDP is taking the lead on climate change and environmental management efforts. Collaboration with the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) resulted in the preparation of Turkey s clean technology investment plan allowing Turkey to access the Clean Technology Fund. Close cooperation with Germany s KfW and UNDP has also been effective in providing technical assistance to improve energy efficiency in Turkey. Moving Forward The World Bank is committed to continuing its strong partnership with Turkey to help improve the lives of the Turkish people. Dialogue with stakeholders informed the development of the Turkey-World Bank Country Partnership Strategy FY Turkey s partnership with the World Bank in the area of sustainable, shared growth, includes timely advice on global good practice (e.g. fiscal and financial management); joint sector work focused on reducing reliance on capital inflows (e.g. Savings Country Economic Memorandum); and increasing productivity and exports (e.g. investment climate reports, Trade Country Economic Memorandum). Programmatic development policy loans from the World Bank are expected to underpin the approach, focusing on high-impact reforms, such as fiscal consolidation and public financial management, commercial and labor market regulation, and improved access to medium and long term finance. On human development, the implementation of legislation on social security and universal health insurance will be important for institutional sustainability and delivery of results. An emerging priority is education quality and skills focused on increasing employment and labor productivity. Reducing deep-seated inequalities of opportunity which account for at least a third of Turkey s income inequality remains a long-term challenge. Turkey has set out to strengthen its contribution to local, national, and global environmental sustainability, reflecting its increasing global leadership profile. The broadening of the electricity development policy lending program to include energy efficiency, climate change and environmental sustainability reforms will be supported by the third pillar of the CPS ( Deepened Sustainable Development ). This expansion may also encompass adaptation to climate change (e.g., for cities and natural resource management).

5 Beneficiaries "I used to take a couple of days off from work when I had to go to the hospital in the past as I had to stand in line and wait literally for hours to receive health services from doctors," said Melis Bozkurt, 47, who has been earning her living cleaning houses for the past 25 years and suffers from chronic asthma and shortness of breath and never received good quality healthcare until this year. "Now it only takes me one hour maximum, to get the services and prescription from my doctor." Through the Universal Health Insurance program, supported by the World Bank, Turkey now provides universal health insurance coverage to 97 percent of the population. Through the School Grants Program, World Bank support is improving the quality of education in Turkey. "How I wish every school in the country could have this. Every kid could learn from this," said Sadettin Camci, an 8th grader at the Aziziye Basic Education School in Emirdag, Afyon, who benefits from the use of "smart boards" to learn the history of the Turkish revolution. He says he likes this new, interactive way of learning. "Sometimes we learn by watching, sometimes by feeling, sometimes by hearing, sometimes by experiment." "Our production capacity grew after we expanded our work space and workforce thanks to the loans we were provided, which was not easy to get a couple of years back. Today we have become a big exporter of aluminum," said Kenan Eser, whose company ALTES produces aluminum and installs siding and windows across Turkey. Eser says a recent loan targeted to businesses like his helped the company expand production and hire more workers even in the midst of a worldwide recession. Today, 150 workers produce and install 100,000 square meters of aluminum a year.