Beyond the 2001 Financial Crisis: The Political Economy of the New Phase of Neo-Liberal Restructuring in Turkey

34 Pages Posted: 17 Aug 2006

See all articles by Ziya Öniş

Ziya Öniş

Koc University - Department of International Relations

Date Written: 2006


Turkey has experienced consecutive financial cises in November 2000 and February 2001. The crisis of 2001 was particularly far-reaching in terms of its impact resulting in a major collapse of output and employment. It was also quite distinct in terms of its income distributional consequences from the previous economic crises that Turkey has experienced in the sense that not only the wage earners, but all sections of society at varying degrees encountered the negative consequences of the crisis. What is also striking is that the crisis provided an avenue for a new wave of neo-liberal restructuring with a major emphasis on regulatory reforms, particularly in the realm of the banking and the financial sector. The objective of the paper is to examine the transformation of Turkey's political economy in the post-2001 era focusing on four key inter-related elements: the impact of the World Bank and the IMF; the restructuring of the state's relationship with the domestic financial sector especially through regulatory reforms; the opening up of Turkey to foreign direct investment; and the adoption of a wide range of reforms modelled on the European Union, in line with the goal of entry into the EU. Indeed, the regional context involving the conditionality associated with the eventual membership of the EU has provided the political focus of the process as a whole. A central question to be addressed involves the extent to which the Turkish economy has become immune to possible financial crises in the future in the light of the kinds of transformation experienced during the central era. A key hypothesis in this context is that Turkey continues to be vulnerable in spite of the fact that the banking sector is much more tightly regulated in line with the international norms during the post-crisis era.

Suggested Citation

Onis, Ziya, Beyond the 2001 Financial Crisis: The Political Economy of the New Phase of Neo-Liberal Restructuring in Turkey (2006). Available at SSRN: or

Ziya Onis (Contact Author)

Koc University - Department of International Relations ( email )

Rumelifeneri Yolu
Sariyer 80910, Istanbul
+90 212 338 1300 (Phone)
+90 212 338 1651 (Fax)


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