Global Crisis, National Responses: The Political Economy of Turkish Exceptionalism

Abstract

With its dilatory and piecemeal fiscal activism and uncharacteristic aversion to IMF assistance, the Turkish government's response to the global economic crisis of 2008–9 diverged considerably from prevalent trends in other major emerging market countries. Underlying this intriguing pattern were Turkey's pre-existing policy and macroeconomic constraints, cognitive lapses on the part of policymakers, and the conjunctural dynamics of domestic politics. The interplay of these factors progressively narrowed the policy space for vigorous action, leading to a motley combination of reactive initiatives that neither offered sufficient protection to vulnerable social groups nor promised sustainable growth in the long run despite rapid short-term recovery.

Keywords:

• global economic crisis
• fiscal stimulus
• IMF
• emerging markets
• Turkey

Notes

The strong GDP rebound of the first half of 2010 (11.7 per cent in Q1 and 10.3 per cent in Q2) was in part due to the ‘base effect’ of the massive decline during the same period in 2009 (–14.6 per cent in Q1 and –7.6 per cent in Q2). Thus, three years into the crisis, Turkey is still struggling to reclaim its pre-crisis levels of output.

See Akyüz (2009), Green et al. (2010), Griffith-Jones and Ocampo (2009), IMF and World Bank (2010), ODI (2010), and UNCTAD (2009) for comprehensive accounts of the impact of and policy responses to the global crisis in emerging and developing countries.

Consider, for example, that despite facing a larger fiscal deficit and higher borrowing rates before the crisis, Brazil's stimulus plan ended up several times that of Poland, which has a constitutional limit on public debt. As such, it was not that Brazil was technically endowed with greater fiscal room than Poland; rather, it had the political volition and institutional freedom to stretch its fiscal means. Recent IMF interest in the notion hardly captures these non-technical dynamics for determining fiscal space (see e.g. Heller 2005). For a recent and more heterodox debate, see Roy and Heuty (2009).

For instance, Programa Jefes de Hogar in Argentina, Bolsa Família in Brazil, and Oportunidades in Mexico.

On Turkey's neoliberal transition in the 1980s and 1990s, see Arıcanlı and Rodrik (1990), Nas and Odekon (1992), Öniş (1998), Cizre-Sakallıoğlu and Yeldan (2000), and Aydın (2005). For the 2001 crisis and the new phase of neoliberal restructuring, see Akyüz and Boratav (2003), Öniş and Rubin (2003), Altuğ and Filiztekin (2006), Öniş (2009), and Öniş and Şenses (2009).

Turkish Statistical Institute Databank (TURKSTAT) (online). Figures indicate a sharp decline in poverty rate, from around 27 per cent of the total population in 2002 to less than 18 per cent in 2006. During the same period, the ratio of the population living under US$4.3 per day dropped from 30 to 13 per cent.

On Turkey's foreign capital-dependent growth pattern, see Demir (2004) and Yeldan (2006).

On Turkish social policy under AKP's early years, see Buğra and Keyder (2006: 222ff).

For an early account of Turkey's anticipated crisis-resilience, see Bakır (2009).

Established in 1990, KOSGEB (Küçük ve Orta Ölçekli I˙şletmeleri Geliştirme ve Destekleme Dairesi Başkanlığı—Directorate of Developing and Supporting Small- and Medium-Sized Entreprises) displayed a model case of institutional drift and decay until mid-2009 when the distribution of new SME supports had to rely on whatever little capacity the agency had accumulated over the past two decades.

For the AKP's early years, see Yavuz (2006).

Ali Babacan replaced Nazım Ekren as the economy minister with enhanced powers, whereas the finance ministry went from Kemal Unakıtan to Mehmet Şimşek, the former treasury minister. Other changes involved ministers for foreign trade, and for industry and trade.

In fact, a fresh report finds that the recent export drive toward Asia, North Africa and the Middle East is far from offsetting Turkey's export losses in the EU market (TEPAV 2010).

At the time of writing (September 2010), official growth projections for 2011 and 2012 hovered around 4–5 per cent, far below the 7 per cent 2003–7 average.

The phrase famously belongs to Obama's chief of staff Rahm Emmanuel (see New York Times 2008).