New Articles – Economics

The global COVID-19 pandemic, which hit the EU in spring 2020, has stressed all areas of society to an unprecedented extent. The ensuing lack of medical supplies, disinfectants, ventilators, and personal protective equipment (PPE) revealed real shortcomings in most EU countries’ preparedness for the situation. The sudden shortage of life-saving goods inverted the order of public procurement markets, with suppliers exploiting the situation to také the initiative at the expense of contracting authorities. The loss of government authorities’ monopsonist position in the public procurement markets (Folliot Lalliot & Yukins, 2020), together with the inability to deliver in time the necessary goods, often simple medical consumables, called into question the whole area of government purchasing. The traditional legislative framework of EU public procurement has thus proved unable to cope with the rapidly growing demand for medical equipment in the current situation.

As early as the 1980s and the early 1990s, empirical studies showed that public procurement can boost innovation, even more so than subsidies for research and development (Geroski, 1990; Rothwell & Zegweld, 1981). In 2006, Viviane Redding (EU Commissioner for Innovation) stated in a press release by the European Commission: “Europe needs to create such a trade environment that will support faster innovation and the acceptance of research results. The public sector has an immense purchasing power; however, it needs the right incentives to share the risks and benefits of investing in new technologies and services” (European Commission, 2006). Subsequently, in around 2007 there was a shift towards public procurement innovations in the EU, and a number of policies and tools to support this decision have been created since then. These policies and tools are currently being implemented, to a varying degree of success, in the national policies of individual EU member states.

After the 24th of January 1980, the Turkish economy had undergone a significant transformation by which inward-oriented and protective import substitution policies had been replaced by outward-oriented and export-based industrialisation and growth strategies (Töngür & Taymaz, 2017). The main characteristics of this transformation composed of liberalisation of the financial sector, opening to foreign markets and integration into international economy (Yeldan, 2016). The government engaged in contractionary fiscal and monetary policies to suppress domestic demand and real wages and kept their priority to increase exports by implementing various incentive and subsidy tools (Doğruel & Doğruel, 2017; Orhangazi, 2020; Soydan, 2018; Yeldan, 2016). As a result of the experienced transformation, Turkey suffered from economic instability and fragility in the post-1980 period (Soydan, 2018). The average annual growth rate decreased from 5.65% in the 1960s to 4.10% in the 1980s (Taymaz & Voyvoda, 2017; World Bank, 2021).

Population ageing currently represents a phenomenon that is occurring around the world. It can also be defined as a consequence of the fertility rate decline and the increasing life expectancy, resulting in an increasing number and a proportion of the population in the post-productive age. For the first time, the elderly population will be predominant over the younger people (World Health Organization, 2020). The ongoing demographic changes are going to characterise the upcoming decades. This process will affect the different areas from the population’s health status through the health systems, the conditions in the labour market, the changing consumption patterns, and the need to provide the system reforms related to higher demand for public resources and finance. Ageing creates deep pressure on fiscal sustainability. It will put unprecedented stress on public finance to fund the pension system, the health system and the long-term care expenditures (Organisation for Economic Co-operation and Development, 2019).

With the creation of EMU (Economic and Monetary Union), new economic conditions were also created. Before entering the euro area, the EU (European Union) member states must fulfill the convergence criteria (or “Maastricht convergence criteria”), which are based on economic indicators and they must continue to respect them once entered. One of the criteria is the price stability and height of the inflation rate. Together with the creation of a new economy, the topic of examining inflation persistence has become actual, particularly over the past decades. Inflation persistence is one of the most important parameters influencing the conduct of monetary policy. The central bank is interested in the degree of inflation persistence to improve inflation forecasting and reliably estimate the dynamic responses of inflation to shocks. The persistence of inflation is known to have a strong impact on monetary policy. If there is considerable inertia in inflation, then inflation shocks take a long-lasting nature and make it difficult for the central bank to control it.