NOTES
- Kepenek , Yakup and Yentürk , Nurhan . 2000 . Türkiye Ekonomisi [Turkish Economy] Istanbul : Remzi Yayinevi . For detailed investigations of Turkey's postwar development experience, including discussions of different policy phases and the nature of the crises leading to major policy shifts, see (Roger Owen and Şevket Pamuk, A History of Middle East Economies in the Twentieth Century (London: I.B. Tauris, 1998); Ziya Öniş and James Riedel, Economic Crises and Long-Term Growth in Turkey (Washington DC: The World Bank, 1993)
- Pamuk , Şevket . 2002 . “Economic Growth in Turkey in Comparative Perspective, 1880–2000,” . In Paper presented at the 6th METU International Conference in Economics Ankara : Middle East Technical University . In a recent comparative study, Şevket Pamuk demonstrates that Turkey's average growth rate of real GDP per capita in the postwar period was higher than the Middle Eastern and Latin American averages. See, Sept
- 2000 . “Entering the 21st Century,” . In World Development Report 1999/2000 New York : Oxford University Press for the World Bank . Five decades of continuous growth have helped generate a large and diversified economy. Recent evidence suggests that Turkey is the 22nd largest economy in the world. Yet its standing on a per-capita income basis is much less impressive, with Turkey occupying only the 89th position. This information is based on figures in World Bank,(These figures suggest growth has not been sufficient to pull standards of living up to developed country standards in the presence of rapid and sustained population growth. For recent demographic trends in Turkey, see TÜSIAD, Türkiye'nin Firsat Penceresi: Demografik Dönuşüm ve İzdüşumleri [Turkey's Window of Opportunity: Demographic Transformation and Projections for the Future] (Istanbul: Türk Sanayicileri ve İşadamlari Derneği, 1999). A striking trend in this context concerns the slowdown of population growth during the 1990s. Nonetheless, Turkey enjoys a disproportionately high share of young people, which has major social and political ramifications. Furthermore, we observe a country characterized by a striking dualistic structure with a rather developed western part coexisting with the underdeveloped east. It is a country highly developed by the standards of the majority of countries in its surrounding regions and yet one significantly lagging behind the EU standards and even the standards of the late Mediterranean entrants to the Community when judged on a per capita income basis
- On the clientelistic nature of Turkish capitalism in the postwar period . 1994 . State and Business in Modern Turkey: A Comparative Study Albany, NY : State University of New York Press . see Ayşe Buğra, (On the obstacles faced in the transition to a more competitive form of capitalism, see İzak Atiyas and Hasan Ersel, “Some Observations on the Role of Private Sector in Turkey,” mimeograph, Sabanci University and Yapi Kredi Bank, Istanbul1999
- This definition is borrowed from David Waldner . 1999 . State Building and Late Development 34 Ithaca and London : Cornell University Press . (p. Waldner uses the term “popular sector incorporation” instead of “populism.”
- One may argue that the military interlude in Turkey has—in a very unintentional manner—contributed to the deinstitutionalization and fragmentation of the party system in Turkey as well as to the rise of political Islam in Turkey during the course of the 1990s . 1997 . Third World Quarterly , 18 ( No.4 ) : 743 – 66 . Hence, we have clear evidence suggesting that short-term stability generated by a temporary authoritarian exit has resulted in greater instability in the future. See Ziya Öniş, “The Political Economy of Islamic Resurgence in Turkey: The Rise of the Welfare Party in Perspective,”
- Öniş , Ziya . 1998 . State and Market: The Political Economy of Turkey in Comparative Perspective Istanbul : Boğaziçi University Press . For a comparative analysis of the role of the state in the development experience of Turkey and the East Asian NICs, see (and Waldner1999
- One may defend this statement on the grounds that the democratic regime clearly did not collapse in the aftermath of the 1994 crisis as it had done earlier in the context of previous economic crises . Nonetheless, one can form an indirect link between deteriorating economic conditions and the rise of political Islam in the mid-1990s, which subsequently resulted in the quasi-military intervention in February 1997 that toppled the coalition government—dominated by the Islamist Welfare Party—out of office. Hence, one can argue that the decisive break with the past in this respect occurred in 2001 and not in 1994. Clearly, an explicit EU anchor played a central role in this context
- On the nature of Argentine neo-liberalism in the 1990s leading to the crisis of 2001 . 2002 . Oxford Development Studies , 30 ( No.2 ) : 63 – 85 . see Werner Baer, Pedro Elosequi, and Andres Gallo, “The Achievements and Failures of Argentina's Neo-liberal Economic Policies,”
- Aricanli , Tosun and Rodrik , Dani , eds. 1990 . The Political Economy of Turkey: Debt, Adjustment and Sustainability London : Macmillan . For a detailed and critical investigation of Turkish neo-liberalism in the 1980s, see (Turkey's growth performance during the 1980–87 period was superior to its performance in the 1988–98 period. Real GNP growth emerged as 4.66 percent for 1980–87 and 4.12 percent for 1988–98 respectively. One also has to take into account the fact that growth recorded during the second phase was an extremely fragile pattern of debt-led growth, which was clearly unsustainable. The validity of this observation is clearly confirmed by looking at the average growth rate for 1999–2001, which has been recorded as −3.3 percent. A fair comparison of the two decades, however, should explicitly recognize the depth of exogenous shocks in the 1990s that exercised a negative influence over the performance of the Turkish economy, taking into account the impact of the Gulf War, the war against the PICK that lasted until early 1999, the earthquake in 1999, and the successive emerging market crises in the late 1990s
- On the weaknesses of the Turkish development model during the 1990s . 2000 . Development and Change , 31 ( No.1 ) : 481 – 508 . see Ümit Cizre-Sakallioğlu and Erinç Yeldan, “Politics, Society and Financial Liberalization: Turkey in the 1990s,”,Nurhan Yentürk, “Short-term Capital Inflows and their Impact on Macroeconomic structure: Turkey in the 1990s,” The Developing Economies Vols.37–38 (1999), pp. 89–113; Mine Eder, “The Challenge of Globalization and Turkey's Changing Political Economy.” in Barry Rubin and Kemal Kirişçi (eds.), Turkey in World Politics: An Emerging Multiregional Power (London and Boulder, CO: Lynne Rienner, 2001), pp. 189–215
- Atiyas , Izak and Sayin , Şerif . 1998 . “A Political Economy Perspective on Turkish Budget Deficits,” . Boğaziçi Journal , 12 ( No.1 ) : 55 – 80 . On the underlying causes of fiscal disequilibrium in Turkey during the 1990s, see pp. One should also emphasize that Turkey was in a state of virtual civil war with the PKK, between 1984 and 1999. The intensification of the armed conflict naturally resulted in the diversion of resources to defense, contributing to higher fiscal instability and lower economic growth than would otherwise have been the case
- Data obtained from the Central Bank's annual reports at <http://www.tcmb.gov.tr/yeni/evds/yayin/yay/eng.html>
- Kalaycioğlu , Ersin . 2001 . “Turkish Democracy: Patronage Versus Governance,” . Turkish Studies , 2 ( No.1 ) : 54 – 70 . For an illuminating study on the nature and limitations of Turkish democracy, see
- 2000 . Insight Turkey , 2 ( No.2 ) : 13 – 18 . For the details of the program, see “Turkey: Letter of Intent, December 9, 1999” at <http://www.imf.org/external/NP/LOI/1999/120999.HTM>. For a concise elaboration of the key features of the program, see Gazi Erçel, “The Disinflation Program for the Year 2000,”
- Atiyas and Sayin . 1998 . 55 – 79 . On the costly nature of “distributive politics” or “populist redistribution”—resulting in heavy interest burden on domestic public debt with an associated squeeze on critical areas of investment during the 1990s—see, pp. The key point to emphasize is that distributive politics did not involve a systematic transfer of resources to the poorest segments of society as part of a coherent social policy
- Rubin , Barry and Heper , Metin , eds. 2002 . Political Parties in Turkey London and Portland, OR : Frank Cass . On the nature of the political parties in Turkey—emphasizing their role as patronage dispersion mechanisms as well as the lack of intra-party democracy—see (The collection of essays contains detailed information on the ideology, operation and leadership styles of all the major political parties in Turkey
- 2001 . Russian and East European Finance and Trade , 37 ( No.6 ) : 51 The recent crises in Turkey have already generated a large literature. For a small sample, see C. Emre Alper, “The Turkish Liquidity Crisis of 2000: What Went Wrong,”pp.—71;C. Emre Alper and Ziya Öniş, “Financial Globalization, the Democratic Deficit and Recurrent Crises in Emerging Markets: The Turkish Experience in the Aftermath of Capital Account Liberalization,” Emerging Markets Finance and Trade Vol.39, No.3 (forthcoming 2003), pp. 5–26; Fatih Özatay and Güven Sak, “The 2000–2001 Financial Crises in Turkey,” Paper presented at the Brookings Trade Forum 2002: Currency Crises, Washington DC, May 2002; Erinç Yeldan, “On the IMF-Directed Disinflation Program in Turkey: A Program for Stabilization or A Recipe for Impoverishment and Financial Chaos?,” mimeograph, Department of Economics, Bilkent University, Ankara (2001). Specifically on the under-regulation of both public and private banks in the outbreak of the crises, see C. Emre Alper and Ziya Öniş, “Soft Budget Constraints, Government Ownership of Banks and Regulatory Failure: The Political Economy of the Turkish Banking System in the Post-Capital Liberalization Era,” Boğaziçi University Department of Economics Working Papers ISS/EC-02–02 (2002[a])
- 2002 . The financial assistance provided by the Fund in December 1999 totaled approximately $4 billion extended over a period of three years. This was clearly not commensurate with the scale of adjustment involved in the banking sector. In retrospect, the severe information problem manifested itself in the Fund's underestimation of the scale of duty losses in public banks and the problem of financing these in the interbank market. See Alper and Öniş,[a])
- Emre Alper , C. and Öniş , Ziya . 2002 . “Emerging Market Crises and the IMF: Rethinking the Role of the IMF in the Light of Turkey's 2000–2001 Financial Crises,” . In Boğaziçi University Department of Economics Working Papers, ISS/EC-02–03 For an elaboration of some of the points made in this section in the broader context of IMF reform, see [b])
- 2001 . On the problems associated with exchange rate-based anti-inflation strategies and the associated currency board experiments, see Barry Eichengreen, “Crisis Prevention and Management: Any New Lessons from Argentina and Turkey?,” mimeograph, Department of Economics, University of California Berkeley
- 1999 . UNCTAD Trade and Development Report, 1999 Geneva : United Nations Conference on Trade and Development . The United Nations Conference on Trade and Development (UNCTAD) has been particularly vocal in this respect. See,(For an argument in favor of national-level capital controls with reference to Turkey, see Yilmaz Akyüz and Korkut Boratav, “The Making of the Turkish Financial Crisis,” Paper presented at the conference on “Financialization of the Global Economy,” PERI, University of Massachusetts, Dec. 2001
- 92 – 119 . On the impact of the 2001 crisis on poverty, see the contribution by Fikret Şenses in this volume)
- For a comprehensive attempt to estimate the size of the underground or informal economy in Turkey over time on the basis of a variety of different methodologies, see Fethi Öğünç and Gökhan Yilmaz, “Estimating the Underground Economy in Turkey,” The Central Bank of Turkey Research Department Discussion Paper Various estimates suggest that the ratio of underground economy to official economy is of the order of 1:5 to 1:4 in recent years, which is certainly a large figure by international standards. 2000
- One should note, however, that resistance to reforms both in the economic and political spheres remained intact in the aftermath of the February crisis. Indeed, major clashes occurred between the newly appointed Economy Minister, Kemal Derviş, and the MHP, key members of the coalition, over a number of key issues of reform. One striking example of this kind of conflict occurred in the context of reforming the Telekom board, one of the key conditions for the $15.7 billion IMF financial rescue package. The MHP was determined to maintain its control over the company and insisted on choosing four of the seven board members. The major conflict between Derviş and the Transport Minister, Enis Öksüz, resulted in a certain loss of confidence and led to a delay in the IMF loan. The financial arm of the IMF was decisive in resolving the issue, however. The board was reappointed two weeks later and the episode ended with the resignation of the transport minister. One could identify several other instances, which were similar to this kind of conflict. What is interesting for our purposes is that the strength of the IMF, in line with the scale of assistance it provided post-crisis, played a key role in breaking the resistance to reform
- It is interesting to note that almost all of the key pieces of legislation in the economic sphere involving financial sector reform, agricultural reform, and privatization designed to satisfy both IMF conditions and the EU's Copenhagen criteria—both in the short- and medium-term—were accomplished by August 2002. In addition, major reforms have been accomplished in the political arena. For information on this issue, see <http://www.ikv.org.tr/turkiye-ab/guncel/Tablo5.htm>. The proper implementation of these reforms, however, is another issue
- The scale of IMF involvement increased after the February 2001 crisis. During the course of 2001 and 2002, Turkey managed to attract a total of $24.5 billion of IMF assistance. This clearly highlights the validity of the earlier criticism that the scale of assistance provided to Turkey as part of the 1999 program was of a rather limited magnitude given the scale of ex post facto adjustment involved
- Brothers , Lehman . Nov. 30, 2001 . “Cliff Hanger,” . In Focus Turkey Private financial institutions have been placing great emphasis on the achievement of EU-related reforms and—notably—EU-related political reforms in the post-crisis era. See Lehman Brothers report as a typical example:
- Palan , Ronen , Abbott , Jason and Deane , Phil . 1996 . State Strategies in the Global Political Economy London and New York : Pinter . On the concept of the “competition state,” see (On Turkey's state tradition and the dichotomy involving the coexistence of a “soft state” in the economic realm with an excessively “strong” and overpowering state in the political realm that is increasingly under challenge, see Metin Heper and Fuat Keyman, “Double-Faced State: Political Patronage and Consolidation of Democracy in Turkey,” Middle Eastern Studies Vol.34, No.4 1998 pp. 259–77
- 2001 . Insight YASED , 2 ( No.4 ) : 12 – 14 . On the underlying causes of weak FDI performance in Turkey, see Abdurrahman Ariman, “Foreign Investments in Turkey,”
- On the measurement of defense expenditure in Turkey and the conceptual problems involved in this process, see Gülay Günlük-Şenesen, “Budget Deficits in Turkey: Expenditure Aspects with Reference to Security Expenditures,” Paper presented at the Third METU International Conference in Economics, Middle East Technical University Ankara, Sept. 1999. For a valuable analysis of the role of the military as an economic actor in the context of the Turkish neo-liberal experiment, see Firat Demir, “A Failure Story: Politics, Society and Financial Liberalization in Turkey; The Paths of Transformation in the Post-Liberalization Era,” Paper presented at the 2002 Annual Meeting of the European Public Choice Society, Belgirate, Italy, April 4–7, 2002
- Meltem-Müftüler-Baç . 1997 . Turkeys Relations with a Changing Europe Manchester : Manchester University Press . For a comprehensive investigation of the evolution of Turkey-EU relations in the postwar context, see
- Rittenberg , Libby , ed. 1998 . The Political Economy of Turkey in the Post-Soviet Era: Going West and Looking East 51 – 78 . Westport, CO : Praeger . On the nature of Turkey-EU relations in the 1990s in the context of the Customs Union, see Canan Balkir, “The Customs Union and Beyond,”
- Öniş , Ziya . 2003 . “Domestic Politics, International Norms and Challenges to the State: Turkey-EU Relations in the Post-Helsinki Era,” . In Turkey and the European Union: Domestic Politics, Economic Integration and International Dynamics Edited by: Çarkoğlu , Ali and Rubin , Barry . London and Portland, OR : Frank Cass . On the impact of the Helsinki summit on Turkey-EU relations and the challenges that lie ahead, see