Analysis of external debts of Turkey and their impact on economic growth

Underdeveloped and developing countries have started seeking models of development in relatively more secure and stable atmosphere, compared to war and pre wartime, which arouse particularly after World War II. The inadequacy of domestic sources, which is one of the common issues of underdeveloped and developing countries has come up as a problem hindering the mentioned seeking efforts. Above stated countries have utilized from outsourcing to overcome this problem.Outsourcing was intended to resolve the problem of inadequacy of domestic sources and to allow the countries to reach their development targets. Yet, these acquired additional sources were not effectively utilized to be directed to investments, and via investments to economic development. Therefore, external debt burden excessively increased in time leading to a source flow from these countries restraining investments and hence economic growth.Turkey, as a developing country, has also utilized from outsourcing. In this study, development of external debts has been analyzed, starting from Ottoman Period until today. Impact of external debts on economic growth has been studied for a period between 1980 and 2010.As a consequence of the study, it is concluded that, external debts have created a negative impact on total investments between 1980 and 2010 in Turkey, and this negative impact on total investments has prevented economic growth.