The third point in developments in the Turkish economy is that tight fiscal policy and sound debt management brought substantial improvement to the debt dynamics, which was in the centre of concerns together with inflation four years ago. So, the gross public debt declined from 107.5 percent in 2001 to 74.6 percent by the second quarter of 2005. The Maastricht criterion on gross public debt may be met in the near future. These achievements on the macroeconomic front, the improvement in the debt dynamics and the positive outlook for growth have brought more resilience to shocks and contributed to financial stability. Volatility in the financial markets has decreased; maturities are now longer; derivatives markets finally begin to develop. 5  The World Bank. Own calculations. 3/8  6  Though it is essentially a political decision, the negotiations between the EU and Turkey would not have started at all if we had not made all these achievements. Distinguished participants, Turkey’s membership implies an expansion of the EU market. The Turkish economy is among the biggest 20 economies in the world. It is the largest economy in Eastern Europe, the Balkans and the Middle East, second in the Black Sea Basin and sixth among emerging market economies. Unlike most of the new member states at the start of negotiations, Turkey already has a functioning market economy, which is far advanced in meeting the economic chapters of the acquis communautaire.
First of all, although the unemployment rate in the Turkish economy is quite high compared to the EU members, we observe that the total increase in employment throughout the year 2004 was much higher than that of the EU members and acceding countries. Another notable issue about the structure of our labour market is that Turkey s economy is moving from a labour intensive structure toward a capital intensive one. And it is a natural consequence that during this period some sectors are expanding while others are contracting. What this implies is that the structure of employment has also been changing. In fact, even though it is still  15  Under-Secretariat of State Planning Organization. 16  http://www.europa.eu.int/comm/eurostat. 17  International Labour Organization. 18  Böttcher, B. (2004). "Turkish Accession to the EU- The Way is the Goal". Deutche Bank Research. 19  International Labour Organization. 20  www.un.org. 6/8  high compared to the EU members, the share of the agricultural sector in total employment has been falling while that of services sector has been on the rise. And I believe that Turkey s young and dynamic demographic structure supports easier transfers between sectors and facilitates improvement in the sectoral dispersion of employment. Having mentioned all these demographic and labour market conditions of the EU and Turkey, I need to emphasize the importance of making further progress on educational reforms in Turkey.