Turkish Economic Review www.kspjournals.org Volume 1 December 2014 Issue 1 Export Price Stability and Compatibility of Euro under the Export- Biased Productivity Growth in Turkey: A Criticism against the Maastricht Inflation Criterion By Emre ÜNAL † Abstract. In this work, we analyzed the export- biased productivity, wage growth and the ULCP in Turkey. Then, by using input- output methods, we could show that Turkey has an economy which is able to be a part of the Euro system and Euro is compatible under the export- biased productivity growth in Turkey though its relatively high inflation. That means Maastricht inflation criterion should be revised in terms of countries’ economic performance. Keywords. Export-Biased Productivity, Unit Labor Cost Parity (ULCP), Wage Growth, Export Price. JEL. E2, F5, N1, O4. 1. Introduction Turkey is the only country which waited for many years to become a member of the EU. Since 1999, Turkey has been a candidate to join the EU and it has been criticized because of political, cultural and human rights issues. However, this work will be about Turkey's economic performance. In this work, we will analyze the compatibility of the Euro under the export- biased productivity growth of Turkey. By using the Leontief inverse matrix, the growth rate of productivity in domestic and export industries will be calculated between 2001 and 2008. Then, we can find the unit labor cost parity (ULCP) of chosen countries and make a comparison analysis and a conclusion about Maastricht inflation criterion. Before the 2000s, the Turkish economy was not strong and it was fragile against external factors. High inflation and trade deficit were the main problems in economy, which showed that Turkey cannot be the part of the EU. However, after the 2000 financial crisis, Turkey produced structural changes to regulate its economy. Therefore, in the last decade, inflation rate and government debt to GNP decreased dramatically and created a strong economy via high growth rates and development. The export- biased productivity growth increased significantly, and export price level became more stable. However, it is still open to question whether it can be a successful part of the EU. In order to make a comparative analysis, several countries were chosen: Germany, Sweden, the UK, Hungary, The Czech Republic and Poland. The strongest country in the center of the EMU (European Monetary Integration) is Germany which is also the central country in this analysis. Many countries became the part of EMU but some countries refused to be in this system. In order to make a comparison with exchange rates, Sweden, the UK, † Kyoto University, Graduate School of Economics. Phd Candidate. Japan. . eemreunal@gmail.com