Turkish Middle Income Trap and Less Skilled Human Capital

Turkish Middle Income Trap and Less Skilled Human Capital

Title:

Turkish Middle Income Trap and Less Skilled Human Capital

Number:

14/30

Author(s):

Gökhan Yılmaz

Language:

English

Date:

September 2014

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 Codes:

O11; O40

Turkish Middle Income Trap and Less Skilled Human Capital
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