Commentary/Esen Çağlar

"Our weak savings performance is perhaps the only issue upon which economists watching Turkey agree. Among them, some consider low savings as driven by low growth, and state that when other factors limiting growth are eliminated, the savings ratio will improve on its own. Others argue that low savings is the main cause of low growth, and thus improving savings is the precondition for improving growth. I don’t know which one is my position yet, but I am ever more convinced that there is a causal relationship between the unplanned urbanization in Turkey and the savings rate problem, and thus, growth. Today I would like to state three observations on this causality.

The first observation is well known. Middle-income countries save 25-30 percent of their GDP while high-income countries save 20 percent. Over the last three decades, Turkey, as a middle-income county, has saved even less than the average among high-income countries."

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