The Importance of Economic Policy in Development: Contrasts Between Korea and Turkey

In the mid-1950's, Turkey was a much richer country than Korea. With about the same population, Turkish GNP was about three times that of Korea, Turkish exports were fifteen times those of Korea, and the Turkish savings rate was much higher than Korean. By 1980, the situation was dramatically reversed, as Turkish income was 40 percent below Korea's, Turkish exports were less than one-fourth those of Korea and the Turkish savings rate was about two-thirds of Korea' s. This paper examines the variables that affected economic growth and shows the critical importance of the different policy choices in the two countries.