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Sources of economic growth in interwar Egypt and Turkey: industrial growth, tariff protection and the role of agriculture

Karakoç, Ulaş (2014) Sources of economic growth in interwar Egypt and Turkey: industrial growth, tariff protection and the role of agriculture. PhD thesis, London School of Economics and Political Science.

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This dissertation presents a paired case study of the growth performance of Turkey and Egypt in the interwar period, in order to shed fresh light on the income per capita divergence that occurred between them. First, we look at the extent and determinants of agricultural growth by estimating the net agricultural output and decomposing the crop output into its components. It is shown that acreage expansion, population growth and improvement in yields led to rapid recovery in agricultural output in Turkey, whereas the increasingly intensive cultivation in Egypt was only able to offset the impact of land scarcity and the earlier deterioration in yields. We also fill a major empirical gap in the literature by estimating industrial output growth and argue that although the industrial take off started in both countries in the 1930s, the output growth in Turkey was much greater. Moreover, industrialisation was mainly driven by textiles in Egypt, whereas it was more balanced in Turkey. Finally, we explore the sources of industrial output growth by focusing on textiles. The empirical analysis based on a partial equilibrium model implies that the impact of tariff protection on domestic growth was significant in both countries, yet it was complemented by the favourable movement of relative prices and wages and, in the case of Turkey, the increase in domestic incomes in the second half of the 1930s. Overall, it is argued that the greater expansion of domestic demand in Turkey, which was particularly driven by agricultural growth, was not only responsible for the per capita divergence, but also combined with different degrees of tariff protection to lead to a notable variation between Turkey and Egypt’s industrial performance. Therefore, the dissertation has implications for the experience of agricultural economies after the Great Depression. It is argued that in the presence of passive monetary and fiscal policies, factor endowments, historical development paths and geography played a prominent role in determining the extent of recovery in the 1930s.

Item Type: Thesis (PhD)
Additional Information: © 2014 Ulaş Karakoç
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Economic History
Supervisor: Howlett, Peter and Pamuk, Şevket

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