FINANCIAL REFORMS AND THE DECOMPOSITION OF ECONOMIC GROWTH: AN INVESTIGATION OF THE CHANGING ROLE OF THE FINANCIAL SECTOR IN TURKEY

Öner GÜNÇAVDI (İstanbul Technical University)
Suat KÜÇÜKÇİFTÇİ (İstanbul Technical University)

Turkey undertook a far-reaching structural adjustment programme in 1980. As an integral elemnt of this programme, financial liberalisation aimed at increasing domestic saving and directing them effciently towards financing investment projects, which will be likely to have positive impacts on economic growth. After 20 years the performance of these reforms in financial markets is still a matter of concern among academics. This paper attempts to analyse compositional structural change in Turkey, especially during the period around 1973-1996 when the most ober "neo-liberal" experiment was forced on the country's economy and society. To accomplish this aim we employ a methodology which is based on the Leontief's inpıu-output framework. We introduce an accounting framework to the analysis of patterns of economic growth, and then apply it to the Turkish input-output tables in order to investigate the sources of economic growth in the financial sector. According to this methodology, changes in output arise from five different sources; namely final demand, export demand, import substitution in final demand, import substitution in intermediate goods and changes in technology. This paper examines the role of each factor in the sectoral production, particularly in the financial sector.