Efficient Use of Capital: Paradox of Real Estate and Industry in Turkey

Efficient Use of Capital: Paradox of Real Estate and Industry in Turkey International Journal of Economics and Finance, Vol:9, No:8, August 2017, pp.221-228.

8 Pages Posted: 29 Jul 2017

See all articles by Ali Hepsen

Ali Hepsen

Istanbul University - Faculty of Business Administration, Department of Finance

Mehmet Asici

Ministry of Industry and Technology

Olgun Aydın

Mimar Sinan Art Fines University - Department of Statistics, Students

Date Written: July 26, 2017

Abstract

In recent years, one of the hottest debates on Turkish economy is the conflict on resource allocation between real estate and industry sectors. The debate was so intense that ex-minister of Economy Mr. Ali Babacan declared his opinions. Mr. Babacan’s statements about the creation of fixed capital by the private sector is not promising, and private sector fixed capital expenditures are not in the desired level. This situation is due to the limited economic growth and future economic growth. In this study, we have investigated whether Mr. Babacan’s statement is right or not. We have discussed the reliability of the measurement of real estate output as Gruneberg and Folwell did in 2013 and Ruddock did in 2002. That could be concluded that we agree with ex-minister of Economy Mr. Babacan’s comments regarding to imbalances among sectors are threatening Turkish economy’s stability. The imbalances are favoring residential real estate investments and consequently the country is exposed to currency risk.

Keywords: use of capital, economic development, economic outlook, real estate investments, mortgage issuance

Suggested Citation

Hepsen, Ali and Asici, Mehmet and Aydın, Olgun, Efficient Use of Capital: Paradox of Real Estate and Industry in Turkey (July 26, 2017). Efficient Use of Capital: Paradox of Real Estate and Industry in Turkey International Journal of Economics and Finance, Vol:9, No:8, August 2017, pp.221-228., Available at SSRN: https://ssrn.com/abstract=3009215 or http://dx.doi.org/10.2139/ssrn.3009215

Ali Hepsen (Contact Author)

Istanbul University - Faculty of Business Administration, Department of Finance ( email )

Istanbul
Turkey

Mehmet Asici

Ministry of Industry and Technology ( email )

Ankara, Ankara
Turkey

Olgun Aydın

Mimar Sinan Art Fines University - Department of Statistics, Students ( email )

Turkey

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