TÜRK EKONOMİSİ - Deneme Sınavı - 2

In Turkey, the mixed economic system had been implemented since the Republic’s founding until the 2000s.

According to functional classification, public expenditures are divided into three main sections. General government expenditure consists of essential public services spending such as administration, legislative, security, justice, and defense services. Welfare expenditures include services that citizens directly benefit from their needs, such as education, health, social security, aid, and housing. Economics expenditures, including investment and services in agriculture, industry, and services, do not directly benefit citizens but rather to firms in the market.

In the old classification of budget expenditures implemented in Turkey until 2003, budget expenditures consisted of current expenditures, capital expenditures, and transfer expenditures.

In 2002, the Special Consumption Tax (SCT) was enacted with Law No. 4760. SCT is an indirect tax, such as VAT, that is required for EU harmonization laws. The purpose of SCT is to provide a social benefit as well as earning income. For this reason, SCT is applied to luxury goods (jewelry, fur, etc.), goods that are harmful to health (alcohol, cigarettes, etc.), and goods causing environmental degradation (gasoline, etc.). SCT is an easy-to-manage and collectible tax for the tax administration as it is a single-stage tax.

While the share of direct taxes in the Turkish Tax System gradually decreased, the share of indirect taxes increased gradually. This problem is quite a controversial issue in Turkey because an increase in the share of indirect taxes in budget revenues brings up the income inequality problem.

Debts must be sustainable so that budget deficits do not create economic problems. Proper public sector debt management depends on the interest rate of borrowing and the stability of exchange rates.

Previously, the General Manager of Public Finance was responsible for borrowing under the same ministry. The General Directorate of Borrowing was established in September 2019 with the Presidential Decree (Decree number: 45).

Non-metropolitan municipalities (848 in total) are allocated 1.5% of the state tax revenues.

Figure 3.1 shows privatization amounts in Turkey from 1986 to 2019. As can be seen from the figure, privatization gained speed post-2003, and in 2013, approximately 12.5 billion dollars of revenue was obtained from privatization.

Fiscal policy can also contribute to pushing aggregate demand beyond potential GDP in a way that leads to inflation. This is sometimes known as an “overheating economy” where demand is so high that there is upward pressure on wages and prices, causing inflation. In this situation, a contractionary fiscal policy involving government spending cuts or tax increases can help to reduce the upward pressure on the price level.

Agriculture, as an important part of an economy, was first theorized by physiocrats, namely A. R. J. Turgot and Francois Quesnay who as some historians argue, managed to create “the first strictly scientific system of economics”.

Beyond being of highest importance for food supply in an economy, agricultural sector and its production help the economy in some other ways. First, the sector provides and strengthens the sustainability of economic growth and development. The contributions of agriculture to total economic activity is often undervalued due to the traditional measuring methods that rely solely on output, thus failing to consider dynamic effects. Thus, due to the fact that the conventional method of agricultural performance measurement includes only the output and raw materials production in the sector, and it excludes both backward and forward linkages and deduces an understated result. Second, the sector is the key provider of typical raw materials for industrial production. Agricultural production not only supplies those materials to the food industry but also helps other sectors producing goods such as tobacco, medicine, textile and leather, furniture, paint and even some parts of electronics.

Rural Depopulation (Rural Flight): The chronic migration of people from rural areas to urban areas.

All of the above are correct.

Climate is an exogenous variable for conventional agricultural production.

Agricultural Intensification (intensive farming, industrial agriculture): The increase in agricultural production per unit of inputs. Agricultural intensification has become widespread particularly after World War I, with the conventional type of farming. Intensification in agricultural production created a productivity-oriented and labor-saving production system which resulted in a democratization of food, especially meat and dairy products. However, it has also harmed the environment in terms of biodiversity and impaired human health via pesticides (Kahn et al., 2020).

The data on crop production includes all the crop production except fodder crops, which are used to feed livestock.

Pulses are the widest range, and most commonly produced agricultural products in the Turkish economy. Despite their lower value generation in comparison to other products, they play a key role in meeting domestic food demand and supplying the food industry.

According to “Standard Layout for UNECE Standards on Fresh Fruit and Vegetables 2017” an agricultural product in this category must have the minimum requirements of being: • Intact • Sound • Clean (at some point, soil is acceptable) • Free from pests • Free from damage caused by pests • Free of abnormal external moisture • Free of any foreign smell and/or taste

There are five main groups of agricultural support payments in Turkish Economy: • Area-based supports • Biological and bio-technic control supports • Compensation payments • Livestock supports • Other supports a. Insurance support b. Support for tea pruning c. Support for certified seed utilization/ production d. Support for certified seedlings and saplings e. Support for protection of agricultural land f. R&D support g. Agricultural publication and consultancy support h. Licensed warehousing support i. Rural development supports