Question

Pick a country from the following list.

Russia, Czech Republic, Egypt, Greece, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, South Africa, South Korea, Taiwan, Thailand, United Arab Emirates, Brazil, Chile, China, and Colombia.

1. Evaluate its unemployment situation/policies with a historical perspective and compare it with the unemployment situation/policies of Turkey.
2. Evaluate its inflation and monetary policy with a historical perspective and compare it with the inflation and monetary policy of Turkey.

Answer 1

                                                      Unemployment and inflation are economic turbulences which can be eliminated by suitable monetary and fiscal policies. The analysis of these situations and the policies undertaken gives a view of how well an economy is functioning. Now, let us compare the above cases in a historical perspective and the policies taken by taking India and Turkey

a)Unemployment situations and policies – India vs Turkey

· As the informal sector has more participation of the working class in India compared to the formal sector, the accessibility to well defined work is an issue faced by Indian workforce whereas in Turkey, the widespread practice of nepotism and the absence of new industries boost the unemployment growth

· From about 2.8% unemployment rate in India at 1980’s much hikes have not occurred since, but that is not the case in Turkey wherein the unemployment rate has seen several ups and downs where it ranged around 10.5% in 2005 and was raised to almost 15% by 2009 which was then lowered to about 7.5% in 2012. The post 2012 era has again seen a hike in the unemployment levels in Turkey.

· The current unemployment rate in India is about 3.4%-3.6% whereas that of Turkey is 13.1%.

· India has been maintaining this unemployment rate with a population of about 135 crores whereas Turkey has only about 8 crore population.

· On the above analysis, it is evident that the unemployment patterns in India has been kept at almost constant levels from the mid 1980’s whereas the levels of unemployment in Turkey have seen many upsurges and downfalls with an increasing trend now a days.

b) Inflation rate and Monetary policy – India vs Turkey

· The price increase of a defined product basket which includes good and services on which an average consumer spends money gives the inflation rate of a nation.

· No nation has been able to maintain a constant inflation rate at all stages due to increased fluctuations and turbulences in the economies across the globe and th story of India has been no different. From 1984, the inflationary rate was about 6.2% which increased to about 8% in the subsequent years and lowered to almost 4% by 1990’s. After the global oil crisis, it skyrocketed to about 14% in the initial stages which was brought back to about 7% by mis 1990’s. The rate was again raised by end of 1990’s due to war with Pakistan and was lowered on a considerable manner by 2003.

The nation was again hit by the global economic recession which caused the inflation to rise gradually from 2009 till 2014 which was brought back thereafter. The current inflation rate is about 3.4% which is expected to rise to 4.1% owing to the global corona virus pandemic that has hit the world.

· As far as the inflationary rate in Turkey is concerned, it has always remained at higher levels, but the recent statistics after 2000 has been encouraging in this regard.

· The statistics shows that in mid-1990’s it was about 48% which raised to about 73% by the end of 1980’s. the trend saw an upward rise up to mid-1990’s where it reached more than 100% to about 105%. Thereafter, it has never raised till 2012 where it was drastically reduced to about 6%. The inflation rate has never raised to the old levels till date although the current inflation stands at about 15% owing to the global corona crisis

· The effect of monetary policy in Turkey can be realised in the post 2001 stabilisation program, whereby it has been able to reduce the inflationary levels from more than 100% to about meagre 6% by 2012.

· There was a change of target from implicit to explicit inflation targeting which aimed at about 4% inflationary rate and was able to bring success to the economy of Turkey

· Appreciating strong capital inflows, currency appreciation and undermining competitiveness of labour-intensive sections, it has been able to bring effectiveness in stabilisation of the economy to a great extend

· The monetary policy history of India has been varying. With the adoption of globalisation in 1990’s the monetary framework has seen a considerable shift.

· With more private participation, there have been may instants where introduction of various government plans has affected the economy. The monetary policies have been able to resist those difficulties arising from similar fiscal measures

· Monetary policies have always been able to maintain a balance in the economy. It has been able to bring back the higher inflationary levels to stable levels in Turkey and maintain a stability as far as India is concerned.