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The Political Economy of Privatization in Turkey: An Evaluation

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The Political Economy of Regulation in Turkey

Abstract

This chapter presents a political economic analysis of the privatization movement in Turkey. In terms of pace and volume, the privatization experience in Turkey can be examined in two different periods. In the period 1985–2003, privatization amounted to only 8.2 billion dollar, while it reached approximately 36.4 billion dollar in the period 2004–2009. The radical transformation in the privatization policies of Turkey is worth analyzing from a political economy perspective. To this purpose, first, the historical background to privatization in Turkey and the circumstances leading to liberalization and privatization policies will be examined. Second, the factors influencing the privatization process such as objectives, strategies, and the effects of economic, legal, institutional, and political conditions will be discussed. Analysis of the privatization experience in Turkey reveals that factors such as legal and institutional structures, political will, unstable macroeconomic conditions, ideological resistance, and rent seeking activities shaped the privatization movement and its consequences.

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Notes

  1. 1.

     North (1990) and other related literature present the crucial effects of institutional factors and/or economic structure on the economic development of countries.

  2. 2.

     For the nationalization practices in the first years of the Republic, see Akalın (2008: 101–118).

  3. 3.

     The total share of income obtained from state monopolies in the total budget in 1924–1930 was 18.3% on average (Ministry of Finance 1992). For detailed information about the étatism and state monopolies in the Ottoman Empire and the founding years of the Republic of Turkey, see Derin (1940).

  4. 4.

     For a study argues that the étatist mentality was adopted at the establishment of the Republic of Turkey in order to achieve the legitimacy of the new state and to hold the economic power so that authority was created over the public, see Beriş (2009).

  5. 5.

     These words by K. Atatürk, founding leader of the Republic of Turkey, clearly illustrate this view: “Our community is completely étatist. In fact, it views demanding all types of needs from the state as a right.”

  6. 6.

     The Kadro Movement is a movement that, under the influence of the 1929 crisis that capitalism went through, defends the industrialization of Turkey through a noncapitalist approach. The group consisting of Şevket Süreyya Aydemir, İsmail Hüsrev Tökin, Vedat Nedim Tör, Burhan Asaf Belge, and Yakup Kadri Karaosmanoğlu published a journal titled the Kadro Journal in ­1932–1934. While there are those who define the Kadro Movement as a communist propaganda instrument (Harris 1967; Tuncay 2009), there are those who define it as a movement that blocked the Turkey socialist movement (Şişmanov 1990; Küçük 1985). A group consisting of Şevket Süreyya Aydemir, İsmail Hüsrev Tökin, Vedat Nedim Tör, Burhan Asaf Belge, and Yakup Kadri Karaosmanoğlu published a journal titled the Kadro Journal in 1932–1934.

  7. 7.

     While the total import of Turkey in 1929 was 256 million TL, this figure dropped to 85 million TL in 1932 (Okyar 1965: 99).

  8. 8.

     For this also, see Buğra (1994) and Keyder (1987).

  9. 9.

     From the establishment of the Republic of Turkey in 1923 until 1946, the Republican People’s Party founded by Atatürk was the only political party in the country. This sense of democracy practiced could be called plebiscite in nature. For the concept of “Plebiscite Democracy,” see Hayek (2007: 100–111).

  10. 10.

     For a study on the positive and negative effects of Özal’s post-1980 economic transformation, see Öniş (2004: 113–134).

  11. 11.

     The term privatization can be used to cover a range of policies from those of governmental disengagement and deregulation to the sale of publicly owned assets (Hemming and Mansoor 1988: 1). In its broadest definition, privatization represents a counter movement to the growth of government and means reducing all forms of state control over resource allocation. Its narrow definition refers to the sale or leasing of assets in which the state has a majority interest, and the contracting out of publicly provided services (Bienen and Waterbury 1989: 617).

  12. 12.

     See Bienen and Waterbury (1989: 623) for the effects of the pressure exerted by international organizations and credit providing countries during the implementation of reform processes and privatization policies in developing countries.

  13. 13.

     In the period 2000–2007, Turkey ranked fifth among OECD countries in terms of absolute size of privatization and seventh in terms of the privatization to GDP ratio and is among the leading countries in the field of privatization (OECD 2009: Chap.1, Table 1).

  14. 14.

     For an analysis of postliberalization macroeconomic performance of the Turkish economy, see Güran and Tosun (2008), which state that Turkey exhibits an unstable economic structure after liberalization.

  15. 15.

     For a detailed evaluation of the populist mentality differences of the political parties and/or party leaders and of the interaction between politics and economic policies in Turkey, see Türkkan (1996).

  16. 16.

     Therefore, “privatization” concept should be defined in broader terms as to include the “privatization of the private sector” (Öniş 1998: 506).

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Authors and Affiliations

  1. Department of Public Finance, Hacettepe University, Ankara, Turkey

    Mehmet Cahit Güran

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  1. Mehmet Cahit Güran
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Correspondence to Mehmet Cahit Güran .

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  1. Yildiz Kampusu, Department of Economics, Yildiz Technical University, Besiktas, 34349, Turkey

    Tamer Çetin

  2. Baglica Kampusu, Baskent University, Eskisehir Yolu 20, Baglica, 06530, Ankara, Turkey

    Fuat Oğuz

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Güran, M.C. (2011). The Political Economy of Privatization in Turkey: An Evaluation. In: Çetin, T., Oğuz, F. (eds) The Political Economy of Regulation in Turkey. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-7750-2_3

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