Turkey – A Work in Progress?

Case Solution

Richard H.K. Vietor
Harvard Business School ()

Over the past 10 years, Turkey has increased its real GDP by around 6% per year. It did so after a huge debt crisis in 200102 that caused Turkey to borrow $ 16 billion from the IMF and stick to its difficult terms. Turkey is currently a middle-income country seeking an effective development strategy. Despite massive capital inflows and a huge current account deficit, it is prone to high inflation with a devalued currency. At the national level, the government has carefully maneuvered between Islamization, democracy, and secularism. And abroad it is a difficult neighborhood: Syria, Iran, Iraq and Israel (not to mention Russia, Europe and the United States). Prime Minister Erdogan is trying to rewrite the constitution before 2014, when the next elections are held.

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