De-industrialisation and poverty in Turkey

Abstract De-industrialisation has emerged as a crucial problem in today's developing economies, and globalisation and rapid technological progress have widely been considered as its causes. However, de-industrialisation has also been going along with a change in political discourse in some countries like Turkey, and it appears to have led to a rise in economic populism. An increase in the shares of non-tradable economic activities in value-added and employment come forward as both an instrument of economic populism and the sign of de-industrialisation. Today's populist discourse is also accompanied by high economic growth led by high non-tradable economic activities and a fall in poverty. This paper examines an empirical link between the recent fall in Turkish poverty and the rise in non-tradable activities and income. De-industrialisation seems to become apparent after 2009, and non-tradable economic activities have overwhelmingly become the engine of economic growth after this year in Turkey. The result shows that non-tradable income distinctively has more reducing impacts on poverty than those of other tradable and agricultural income. This can be regarded as one of the reasons why the Turkish policymaker fulfilling populist discourse chooses non-tradable economic activities and encourage non-tradable income to rise on average more than others.JEL Code: E25, I32, O11, O14