Effectiveness of Incentive Policies in Exit from Middle Income Trap: The Case of Turkey

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Effectiveness of Incentive Policies in Exit from Middle Income Trap: The Case of Turkey

Journal Title: The Journal of International Scientific Researches - Year 2017, Vol 2, Issue 4

Abstract

Despite being introduced to economics literature by Barry Eichengreen, a widely accepted definition of the concept of middle-income trap is made by the World Bank. According to that definition, whether countries are in trap or not is revealed based on the classification of their per capita income levels. In this context, having been among the upper middle income economies for many years shows that Turkey is in the middle-income trap. The aim of this study is to assess the effectiveness of the incentive policies put into practice in Turkey in order to escape the middle-income trap in they ears of 2004, 2006, 2009 and 2012. The evaluations show that the 2004 and 2006 incentive policies had not provided the etargeted benefits. Therefore, the incentive policy was developed and entered into force in 2009. However, since the desired results could not be obtained in reducing regional development differences, a new incentive system was put into effect in 2012. Although providing significant improvements on regional and sectoral levels, this expanded incentive policy was not sufficient. Thus, to be able to exit from the middle-income trap Turkey needs, along with the improvement of present regional and sectoral level policies, to focus on policies at national level such as; innovation, production of high value-added products, and qualified labor. Turkey will have a higher per capita income depending on the implementation of regional and sectoral level policies integrated with national level policies.

Authors and Affiliations

Gizem Akbulut, Barış Yıldız

Keywords

Incentive Policies Middle-Income Trap Regional Development

EP ID EP169745
DOI 10.23834/isrjournal.284295
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