Independence to 1970s

In the 1920s, less than 25 per cent of Turkey's population lived in urban centres with more than 5,000 inhabitants. The industry inherited from the Ottoman Empire was extremely weak, almost non-existent. The proportion of those living in either rural or urban areas remained little changed until after the Second World War, but rapid urbanization has happened since then. The proportion of the population living in urban centres had increased to 44 per cent by 1980 and to 68 per cent by 2005. Rapid urbanization also meant large movements within the labour force. Agriculture's share of total employment figures declined from about 80 per cent in 1913 to 34 per cent in 2005, whereas industry's share rose from about 9 to 23 per cent during the same period, and that of services increased from 11 to 43 per cent. Before the late 1970s, Turkey was considered an agricultural powerhouse that could feed its own people without any agricultural imports, and even exported some agricultural surplus. Similarly, agriculture's share of GDP declined from about 55 per cent in 1913 and 54 per cent in 1950 to 11 per cent in 2005. Industry's share of GDP increased from about 13 per cent in 1913 to 26 per cent in 2005, and the share of services increased from 34 to 64 per cent during the same period.

A decade of war beginning with the Balkan wars in 1912 had resulted in a dramatic 20 per cent decline in population and a more than 40 per cent decline in per capita income before the establishment of the Republic of Turkey in 1923. The gap between the high-income countries of Western Europe and the United States and the developing economies in the world widened considerably during the century before the First World War due to the rapid industrialization that took place in the countries in the former group. GDP per capita in the area within the present-day borders of Turkey was around $1,200 in 1913, less than 30 per cent of the level of GDP per capita in the high-income countries of Western Europe and the United States at that time.