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on Central and Western Asia |
| By: | Gokhan Yilmaz |
| Abstract: | This paper reviews the literature on the Middle Income Trap and compares Turkey to the rest of the trapped and non-trapped (non-middle income trapped) countries. We analyze country experiences by focusing on the role of well-designed and high quality education system to avoid the trap. When we compare Turkey’s human capital to human capital in non-trapped countries, we observe that Turkish education system will be critical to break out the trap. An education system that is consistent with development path of the economy could yield both “skilled and high capability human capital” and “innovative and competitive productive capacity” to overcome the trap. Our qualitative analysis also demonstrates that Turkey has not been benefitting from de-agriculturalization sufficiently. Surplus labor coming from agriculture is not being employed in the knowledge intensive manufacturing activities. Moreover, the speed of de-agriculturalization is slow, hence Turkey can’t fully exploit unrepeatable gains of structural transformation. Transferring these agriculture workers into high productivity tradable activities can yield significant labor productivity and per capita income gains. |
| Keywords: | Economic Growth, Convergence, Middle Income Trap |
| JEL: | O11 O40 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1430&r=cwa |
| By: | Dudu, Hasan; Cakmak, Erol H |
| Abstract: | This paper analyses the effects of climate change and trade liberalization on Turkish Economy between 2008 and 2099 by using a recursive dynamic CGE model. Results of a crop-irrigation requirement model are used to generate climate change shocks. The results suggest that the effects of climate change will be effective especially after 2030s with acceleration after 2060s. GDP loss gets as high as 3.5 percent. Main drivers of the loss in GDP are the significant decline in private consumption and up to two percent increase in imports. A trade liberalization scenario where tariffs on imports from EU are eliminated unilaterally by Turkey is also simulated to investigate the interaction between climate change and trade liberalization. Trade policy alleviates the negative effects of climate change only marginally for Turkey, as suggested by the literature for many other regions in the world. Trade liberalization with EU causes a trade diversion effect and decreases imports from other trading regions. The main adjustment mechanism of the economy under trade liberalization works through the substitution of factors for intermediate goods, imported consumption goods and intermediate inputs for domestic goods. Maize, oilseeds, fruits and processed food benefit from trade liberalization while production of other crops generally decline. |
| Keywords: | Climate Change, Trade Liberalization, Agriculture, Computable General Equilibrium, Turkey, Environmental Economics and Policy, Land Economics/Use, Research Methods/ Statistical Methods, C68, Q54, Q17, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea14:172964&r=cwa |
| By: | Binnur Balkan; Semih Tumen |
| Abstract: | Observationally equivalent workers are paid higher wages in larger firms. This fact is often named as the “firm-size wage gap” and is regarded as a key empirical puzzle. Using micro-level data from Turkey, we document a new stylized fact : the firm-size wage gap is more pronounced for informal (unregistered) jobs than for formal (registered) jobs. To explain this fact, we develop a two-stage wage-posting game with market imperfections and segmented markets, the solution to which produces wages as a function of firm size in a well-defined subgame-perfect equilibrium. The model proposes two explanations. First, taxes on formal employment generate a wedge between formal and informal size wage gaps. Thus, government policy can potentially affect the magnitude of the firm-size wage gaps. The second explanation features a market-based framework with strategic interactions. Relative to small firms, large firms typically post higher wages for both formal and informal jobs they open. A high-wage formal job attracts a larger pool of applicants than a high-wage informal job. The larger pool of applicants for the formal job, in turn, allows the firm to somewhat lower the initial wage offer, while this second-round effect is negligible for informal jobs. As a result, size differentials are lower in formal jobs than informal jobs. We argue that the observed patterns in the use of social connections in job search and heterogeneity in job preferences can be used to justify the validity of this second mechanism. |
| Keywords: | Firm size, Wage gap, Informal job, Wage posting, Subgame perfection, Taxes, Social networks |
| JEL: | C78 J21 J31 L11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1434&r=cwa |
| By: | Nino Papachashvili (Ivane Javahkishvili Tbilisi State University); Lela Jamagidze (Ivane Javahkishvili Tbilisi State University) |
| Abstract: | The present work discusses the decisions of economic agents and the interactions among them in Georgia‟s transformation economy from new institutional point of view. European integration is an irreversible economic orientation of Georgia, which influences both formal and informal institution formation. The authors argue that the analysis of the economic value formation aspects of the ongoing process of Europeanization is important for the understanding of the stage by stage outcomes of this process. The Association Agreement between Georgia and the EU represents Georgia‟s Europeanization action plan. The Agreement stresses that European values represent the cornerstone of economic integration and political association. The implementation of the Association Agreement will bring concrete benefits in terms of increased opportunities for small and medium sized businesses, access to the European education, strengthened rule of law, etc. The authors argue that the success of modernization depend on the one hand, institution imports and on the work of these institutions on the other. The foundation of their effective work will be those value constructs that the society holds. The success of institution implementation depends on pace of the increase in the number of people, who use them. The faster the realization of the need and benefits of the observation of certain “rules of the game”, the faster they will be institutionalized. Institutional adaptation gives the economic agents broader opportunities for their economic activities and they adopt new strategies of behavior related to the changes of the institutional framework. Adaptability to the imported institutions depends on the economic values of the economic agents and the benefits of the implementation of the new institutions. The present study incorporates economic values in the analysis of the economic agent interactions against the background of Europeanization. The authors offer a theoretical approach to pose the problem and evaluate the behavior of economic agents in the context of importing European institutions and values in Georgia. The nature of the interactions among the economic agents significantly defines the smooth functioning of the economic system. The authors emphasize that study of the economic agent behavior (state and businesses) in institution import and economic value transformation context will enable to identify the challenges of the adaptation process. |
| Keywords: | import of instituions; transition economy |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2014/30&r=cwa |
| By: | World Bank |
| Keywords: | Secondary Education Teaching and Learning Technology Industry Tertiary Education Access and Equity in Basic Education Industry Education |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:20019&r=cwa |