Economic Instability

This is still a concern despite recent reforms and a 10% rise in productivity in 2004. International investors remember the series of economic crises that plagued Turkey in the 1990s and led to an IMF bailout in 2001. Turkish business leaders know that while inflation is finally under control and fiscal policy tight, perils remain. Current-account deficits are large, while foreign investment is small. In 2004 Turkey had less foreign investment than Belarus, which is one third its size and has one sixth of its population. Another persistent problem is the disparity of income between the western and eastern sections of the country. Turks living in Eastern Anatolia engaged in such tasks as shelling pistachio nuts for $50 a month have incomes comparable to those of Afghan farmers while Turks living in the western part of the country have incomes comparable to their counterparts in Greece. The challenge of bringing electricity, roads and schools to the far reaches of Anatolia is a formidable one, especially when Turkey as a whole needs a better infrastructure for economic development.

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