2014 Index of Economic Freedom

Turkey

overall score64.9
world rank64
Rule of Law

Property Rights50.0

Freedom From Corruption44.0

Limited Government

Government Spending63.5

Fiscal Freedom77.5

Regulatory Efficiency

Business Freedom67.6

Labor Freedom59.7

Monetary Freedom71.8

Open Markets

Trade Freedom84.5

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 74.9 million
  • GDP (PPP):
    • $1.1 trillion
    • 2.6% growth
    • 3.1% 5-year compound annual growth
    • $15,001 per capita
  • Unemployment:
    • 9.2%
  • Inflation (CPI):
    • 8.9%
  • FDI Inflow:
    • $12.4 billion
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Turkey’s economic freedom score is 64.9, making its economy the 64th freest in the 2014 Index. Its score is 2.0 points better than last year, with notable improvements in labor freedom, investment freedom, and freedom from corruption partially offset by declines in monetary freedom and the management of public spending. Turkey is ranked 30th out of 43 countries in the Europe region, and its overall score is higher than the world average.

Over the 20-year history of the Index, Turkey has advanced its economic freedom score by over 6 points. Its relatively broad-based overall improvement has been facilitated by advancements in six of the 10 economic freedoms, including monetary freedom, freedom from corruption, and fiscal freedom, scores for which have improved by over 30 points. Its overall gain, however, has been undermined by deteriorations in property rights and financial freedom.

Recording score improvements two years in a row, Turkey has achieved its highest economic freedom score ever in the 2014 Index. Deeper institutional reform to firmly establish the rule of law and improve regulatory efficiency will be critical to solidifying its transition to a more market-based economy.

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Background

Turkey is constitutionally secular, but Prime Minister Recep Tayyip Erdogan’s Justice and Development Party has been pushing an Islamist agenda and eroding Turkey’s Euro–Atlantic connections. The country was rocked by large-scale protests in early 2013. Economic modernization is progressing despite clashes with the media and the slow pace of judicial reform. Turkey has been a member of NATO since 1952. In early 2013, NATO deployed air defense units on Turkey’s southern border because of concerns raised by Syria’s civil war. The European Union granted Turkey candidate status in 1999, but there is strong opposition from France, Germany, and Austria. Turkey’s dispute with Cyprus has also delayed negotiations. Principal exports include foodstuffs, textiles, clothing, iron, and steel.

Rule of LawView Methodology

Property Rights 50.0 Create a Graph using this measurement

Freedom From Corruption 44.0 Create a Graph using this measurement

Turkey struggles with corruption, cronyism, and nepotism in government and daily life. The government has adopted some anti-corruption measures, but progress has been limited. The judiciary is independent, but in practice, the government can influence judges through appointments, promotions, and financing. Property rights are generally enforced, but the courts are slow, and judges are not well trained for commercial cases.

Limited GovernmentView Methodology

The top individual income tax rate is 35 percent, and the top corporate tax rate is 20 percent. Other taxes include a value-added tax (VAT) and an environment tax. Overall tax revenues equal 25 percent of the size of the economy. Government spending is 35 percent of GDP. Public debt amounts to about 36 percent of gross domestic output. Budget targets are under threat as the government spends in the run-up to elections.

Regulatory EfficiencyView Methodology

The overall regulatory framework has undergone a series of reforms, but the pace of reform has slowed markedly in comparison to other emerging economies. Despite some progress, the labor market lacks dynamism due to lingering rigidities. A large informal sector persists. Monetary stability remains weak. In the past, the government reduced subsidies for fuel and electricity, but state spending for health care has been increasing.

Open MarketsView Methodology

The average tariff rate is 2.7 percent. Agricultural products may face especially high trade barriers. Foreign and domestic investors are generally treated equally under the law, but investment in some sectors is restricted. The financial system continues to evolve, with overall financial intermediation accounting gradually increasing. Banking remains relatively stable, but privatization in the sector has been slow.

Country's Score Over Time

Bar Graph of Turkey Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Turkey to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81.60.6
2Ireland76.20.5
3Denmark76.10.0
4Estonia75.90.6
5United Kingdom74.90.1
6The Netherlands74.20.7
7Luxembourg74.20.0
8Germany73.40.6
9Finland73.4-0.6
10Sweden73.10.2
11Lithuania730.9
12Georgia72.60.4
13Iceland72.40.3
14Austria72.40.6
15Czech Republic72.21.3
16Norway70.90.4
17Belgium69.90.7
18Armenia68.9-0.5
19Latvia68.72.2
20Macedonia68.60.4
21Cyprus67.6-1.4
22Spain67.2-0.8
23Poland671.0
24Hungary 67-0.3
25Albania66.91.7
26Slovakia66.4-2.3
27Malta66.4-1.1
28Bulgaria65.70.7
29Romania65.50.4
30Turkey64.92.0
31Montenegro63.61.0
32Portugal63.50.4
33France63.5-0.6
34Slovenia62.71.0
35Italy60.90.3
36Croatia60.4-0.9
37Serbia 59.40.8
38Bosnia and Herzegovina58.41.1
39Moldova57.31.8
40Greece55.70.3
41Russia51.90.8
42Belarus50.12.1
43Ukraine49.33.0
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