The Ups and Downs of Turkish Growth, 2002-2015: Political Dynamics, the European Union and the Institutional Slide

34 Pages Posted: 11 Oct 2015  

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Murat Ucer

Koc University

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Date Written: September 25, 2015

Abstract

We document a change in the character and quality of Turkish economic growth with a turning point around 2007 and link this change to the reversal in the nature of economic institutions, which eat underwent a series of growth-enhancing reforms following Turkey's financial crisis in 2001, but then started moving in the opposite direction in the second half of 2000s. This institutional reversal, we argue, is itself a consequence of a turnaround in political factors. The first phase coincided with a deepening in Turkish democracy under the prodding and the guidance of the European Union, and witnessed the waning of the military's influence and the broadening of effective political participation. As Turkey-European Union relations collapsed and internal political dynamics removed the checks against the domination of the governing party, in power since 2002, these political dynamics went into reverse and paved the way for the institutional slide that is largely responsible for the lower-paced and lower-quality growth Turkey has been experiencing since about 2007.

Keywords: economic growth, emerging markets, institutions, institutional reversal, low-quality growth, Turkey

JEL Classification: E65, O52

Suggested Citation

Acemoglu, Daron and Ucer, Murat, The Ups and Downs of Turkish Growth, 2002-2015: Political Dynamics, the European Union and the Institutional Slide (September 25, 2015). MIT Department of Economics Working Paper No. 15-08. Available at SSRN: https://ssrn.com/abstract=2672052

Daron Acemoglu (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Murat Ucer

Koc University

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