The Re‐making of the Turkish Crisis

Abstract

By the end of 2018 Turkey had entered a new economic crisis and a lengthy recession period In contrast to the previous financial crises of 1994, 2001 and 2009, when the economy shrank abruptly with a spectacular collapse of asset values and a severe contraction of output, the 2018 economic crisis was characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising unemployment, spiralling currency depreciation and high inflation The mainstream approach attributes this dismal performance to a lack of ‘structural reforms’ and/or exogenous policy factors However, this analysis shows that the underlying sources of the crisis are to be found not in the conjunctural cycles of reform fatigue, but rather in the post‐2001, neoliberal, speculation‐led growth model that relied excessively on hot‐money inflows and external debt accumulation This article argues that following the post‐2001 orthodox reforms, a foreign capital inflow‐dependent, debt‐led and construction‐centred economic growth model dominated the economy and caused a long build‐up of imbalances and increased fragilities that led to the 2018 crisis The Covid‐19 pandemic of 2020‒21 further exposed these fragilities, pushing the economy back into a recession with rapid capital outflows causing another round of sharp currency depreciation [ABSTRACT FROM AUTHOR] Copyright of Development & Change is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder s express written permission However, users may print, download, or email articles for individual use This abstract may be abridged No warranty is given about the accuracy of the copy Users should refer to the original published version of the material for the full abstract (Copyright applies to all Abstracts )