The trap of middle income scale: Comparison of Turkey with the South Korea

"The trap of middle income scale" in economics is a subject matter over which man talked fairly frequently in recent years and it was included in the report of the World Bank for the first time in 2007. The number of the countries that can manage to attain the ones with high income scale in the past ten years is even less than those reaching the middle income scale. Turkey is a country included in the subgroup of middle income scale in 1955 and a country which managed to rise up to the upper middle income scale in the wake of 50 years as from 1955. Nevertheless, Turkey has kept its position as having the upper middle income scale for over 10 years. South Korea having the similar economic indicators as compared with those of Turkey, which had remained at the level of middle income scale for a period of 60 years, in 1980s managed to be among the world giants in a short while. It is a known fact that a given country is supposed to have some world-wide criteria which will enable it to be in a position with high income scale. Among the criteria at issue, the dominancy of the sectors making production focused on technology over the economy of the country and taking possession of competitive power form the leading ones, South Korea has been one of the leading powerful economies nowadays by carrying out the required criteria thanks to the planned development. The present thesis aims at surveying why and how on earth these two countries are now in a different position whereas they had tried to improve their economies thanks to the planned development and had had the similar events and indicators within the same period. The economies of both countries have meticulously been studied to effect this aim. In the consequence of the studies, the fact that the agricultural sector was developed at first and a great emphasis was placed on education has drawn attention. It has been noticed that thanks to the wealth effected in the country, investments were oriented to the industrial sector and that R&D studies were accelerated through the help of the qualified personel. Thanks to the emphasis placed on technology, the exportation increased as a result of the production of the products having a high competitive power and the level of income rose in South Korea. As for Turkey, income per capita has remained in the vicinity of $ 8.000-10.000. The present study aims at finding the very answer to the question of how Turkey will be able to get rid of the trap of middle income by taking into consideration of the South Korea, a country which was able to reach a level at which it could compete with the other countries of the world without falling into the aforementioned trap that Turkey underwent. It goes without saying that there are some lessons to be taken from the situation of the South Korea and the present study deals with lessons not to be sneezed at from the point of view of Turkey. It follows clearly from the data obtained that Turkey has to provide the stability of price and finance in country. It has been concluded that Turkey should pattern itself after the collaboration of chaebol-state which plays and important role in the progress of South-Korean economy and should carry out required reforms concerned with the institution in the country. As a result, it can be possible for Turkey to be able to enhance its competitive power merely thanks to the exportation of the products having high additional values in the global area in which technology exhibits a rapid development.