Article

Economic Growth and Unemployment in Turkey after 2001: Dynamics of Unemployment in Turkey

Abstract

Turkish economy has experienced an economic transformation with the Program of Transition to Strong Economy (Güçlü Ekonomiye Geçiş Programı) which has been applied since 2001. Three basic features of Turkish economy attracted attention before 2001. These can be listed as dynamics of unsustainable domestic debt, structural problems in financial system, and low growth rate. After 2001, it has been seen that these problems have been eliminated. On the other hand, some problems which are different than the problems before 2001 have started to emerge in the economy. The most important problems of economy, undoubtedly, are unemployment and current account deficit. Especially, it has been observed that high growth rate between 2001- 2007 could not reduce the unemployment rate. This has also led to discussions on whether economic growth cannot create employment. In this paper, the effects of high growth rate which Turkish economy has experienced since 2001 on unemployment will be discussed. The main argument of this article is that there is not a clear relationship between variables contrary to some economic theory. In this context, before all else, the direction of relation between variables will be identified by using Granger Causality Test. Because a clear relation is not found between variables, the question of what the dynamics of unemployment are has been raised. In this sense, this paper will also attempt to discuss the dynamics of unemployment in Turkey.

Keywords

Economic Growth Unemployment Granger Causality Test Creative Destruction Kondratiev Waves