Turkey's external financing requirement and development of external financing sources

In developing countries, there is an underproduction and insufficient capital and savings because of the inadequate industrialization. As a result, economic growth rate is slow and there is no economic stabilisation. As a developing country, these issues exist for Turkey, too. Accordingly, the importance of external financing concept becomes more important day by day. The subject of this study is to analyze the requirement of external financing and development of the external financing sources of Turkish Republic from the establishment of the goverment until today. In this context, some raitos such as external debt, foreign capital investments, current account balance and payments of foreign debts have been used in making the analysis. According to research findings, it has been determined that there is a constant need for external financing for the reason that there is a demand for expediting the economic growth and development in Turkey, precautions taken for ramping up the exportation and the external debt expands day by day. Between the years 1923-2018, the need for external financing in Turkey increased during periods of economic growth, while it decreased during periods of recession. Although there was no significant increase in external financing need from 1923 to 2000 regarding the amount and growth rate in Gross Domestic Product (GDP) per capita, the requirement has increased rapidly since 2000. The foreign financing requirement was met by external loan and foreign indebtment until 1950s, mostly by foreign indebtment during the period between 1950 and 1980 and mostly by foreign indebtment and foreign capital investments after 1980s. Key Words: External (Foreign) Financial Need, External Debt, Foreign Capital Investments, Current Account Deficit, External Debt Service.