Planned Economy: The reasons behind planned economy: ▫Economic depression of the 1950s ▫To strenghten the economic and political position of bureaucracy ▫Uncertainity in the usage of capital resources ▫A large and protected market is necessitied ▫Demand from other countries and international institutions ▫Developments in economic theory

Planned Economy: Characteristics of the planned economy: ▫Includes all aspects of economic and social progress ▫Long-dated ▫Imperious for the public sector and guidance for the private sector ▫Common characteristics of the first 4 plans:  Production structure is taken as given  Main aim is to reach a pre-determined growth rate  Industrialization is important  They are parts of a long-term strategy

Planned Economy: Implementation started with the new legal and constitutional arrangements after the military coup. The following civilian government continued the applications.

Development Plans I. BYKP: II. BYKP: III. BYKP: IV. BYKP:

I. BYKP: İnsan hak ve hürriyetlerini, milli dayanışmayı, sosyal adaleti, ferdin ve toplumun huzur ve refahını gerçekleştirmeyi ve teminat altına almayı mümkün kılacak bir demokratik düzeni kesin olarak seçmiş olan Türk Milletinin, Anayasamızda açık ifadesini bulan iktisadi ve sosyal hayatı, keyfi ve plansız davranış tecrübelerine son verip adalete, tam çalışma esasına ve herkesin insan haysiyetine yaraşır bir yasayış seviyesi sağlanması amacına göre düzenleme arzu ve azmine uygun olarak : Milli tasarrufu artırmak, yatırımları toplum yararına, gerektirdiği önceliklerle yöneltmek ve iktisadi, sosyal ve kültürel kalkınmayı demokratik yollarla gerçekleştirmek üzere Birinci Beş Yıllık ( ) Kalkınma Planı hazırlanmıştır (1.BYKP, s.2).

I. BYKP: Stable and balanced development Aims: ▫Annual growth rate of 7 % ▫Qualified labor force ▫To solve employment problems  To prevent urbanization  New employment opportunities in the rural areas  Population planning ▫Balance of payments  import substitution

I. BYKP: ▫Social Equity  Income distribution  Elimination of regional inequalities ▫Balanced growth of agriculture and industry

II. BYKP: İkinci Beş Yıllık Plan devresinde milli gelirimiz her yıl % 7 artacak ve fert başına düşen gelir 2600 liradan 3200 liraya yükselecektir. Gelecekte daha yüksek bir refah seviyesine kavuşmak için gerekli yatırımların yapılmasının bir mecburiyet olduğu göz önünde bulundurulursa, nüfusu yılda % 2,6 gibi yüksek bir oranla artan memleketimizde fert başına daha yukarı bir gelir artışı sağlayamamanın nedeni ortaya çıkar. İkinci Beş Yıllık Plan, Türkiye’yi ham madde satıp, mamul madde alan iptidaî bir ekonomik bünyeden; mamul madde yapıp, mamul madde satan sanayileşmiş bir bünyeye götürme istikametinde mühim bir adımdır. Böylece sanayimizin GSMH içindeki payı % 25,5 den % 30,7 ye yükselmektedir. Bunu sağlamak tarımla meşgul olan nüfus oranını azaltmakla mümkündür. Bu sebeple bir taraftan sanayileşmeye giderken, diğer taraftan tarımda modern teknolojinin bütün imkânlarından faydalanarak daha çok gelir sağlama imkânları İkinci Beş Yıllık Planda derpiş edilmiştir. Keza bu dönemde sanayileşmenin ayrılmaz cüzünü teşkil eden enerji ve münakale ekonomisine mühim meblâğlar yatırılacaktır. Böylece tarım dışında birbuçuk milyon ve bütün sektörlerde iki milyon üçyüzbin vatandaşa yeniden iş imkanları açılacaktır.

II. BYKP: Aims an annual growth rate of 7% Other aims are also similar to the first plan, it more focuses on growth rate Differences from the first plan: ▫Industry is taken as the engine sector  both quantity and quality  durable consumption goods (private sector and foreign firms)  intermediate goods (public sector) ▫Urbanization as a tool  labor force  demand expansion

II. BYKP: Problems ▫1 st vicious circle low savings low investments low income

II. BYKP: Problems ▫2 nd vicious circle limited domestic production low exports low imports

III. BYKP: Prepared after the March 12, 1971 military coup A perspective of 22 years Qualified development Relations with the European Economic Community

III. BYKP: Growth rate To increase savings Intermediate and investment good production

IV. BYKP: Public sector leadership Reform proposals: ▫Justice ▫Education ▫Public sector Long-term goals: ▫To increase national income ▫Production of intermediate and investment goods

IV. BYKP: Applied with a one year delay A period of economic crises ▫Increases in petroleum prices ▫Stagnation in export markets ▫Consumption expanded (Overvalued TL and negative real interest rates) ▫No efforts to increase exports ▫End of sending workers to Europe ▫Structure of production

IV. BYKP: Aim: ▫To end the economic crises and achieve a high growth rate ▫Target growth rate: 8,2 % ▫To increase exports ▫Structural change and transformation of industry ▫Priority given to mining and energy ▫Income distribution Relations with EEC is frozen

Capital Resources Domestic Resources: ▫Increase in money supply ▫Increase in TCMB credits  Budget deficits  TEKEL  The finance of PEEs ▫Bank deposits are very low due to negative real interest rates

Capital Resources Domestic Resources: ▫Public finance:  Indirect taxes increased  Tax arrangements were complex  Capital incomes were taxed at the minimum to increase capital accumulation  The share of investments in public expenditures decreased, however share of current expenditures increased  Populist policies ???

Capital Resources Budget deficits ▫Domestic borrowing  interest rates ▫Foreign borrowing ▫TCMB resources

Capital Resources Foreign Resources: ▫The need for foreign resources increased ▫Short-term borrowing to finance current account deficits (60%) ▫Average maturity of long-term borrowing decreased from 22,1 years to 12,7 years ▫Interest rate increased from 4,4% to 7,6% ▫Payment diffuculties ▫EEC started to replace USA ▫Foreign capital increased (Durable goods: electrical equipments, automobile, etc.)

Investments (%) 1 st Plan2 nd Plan3 rd Plan PlannedRealizedPlannedRealizedPlannedRealized Share in National income Domestic Resources Foreign Resources

Investments: Sectoral distribution

Period Import facilities: ▫Custom duties are decreased (41,8  27,7) ▫Appreciation of TL ▫Quotas are abolished ▫Additional Protocol with EEC

Period Crisis in 1978: ▫First and Second oil crises ▫The collapse of the Bretton-Wood System ▫The mismatch of expenditures and revenues June 1979: Stabilization Program signed with IMF