Caner Bakir

Turkey's Political Economy in the Age of Financial Globalization: The Significance of the EU Anchor

The recent Turkish experience clearly illustrates how markets and politics can interact in producing significant economic transformation. Focusing on the new phase of neo-liberal restructuring in Turkey in the post-crisis era, we highlight the importance of the European Union (EU) and International Monetary Fund (IMF) anchors and the specific domestic and external linkages through which these double external anchors have operated. We argue that the anchors played significant and complementary roles in the recent transformation process in Turkey. We also underline some of the tensions that are likely to arise in the new era of accession negotiations with the EU given the incomplete transformation accomplished so far.

Wobbling but Still on its Feet: The Turkish Economy in the Global Financial Crisis

This paper examines the Turkish economy in a world of current global financial crisis. It shows that Turkeys key economic strengths include relatively prudent fiscal balances and a resilient banking sector. Key economic weaknesses include non-financial private sector foreign debt rollover risk, substantial household indebtedness where the unemployment rate is rising, an overvalued Turkish lira with its potential for rapid depreciation, and contracted growth and demand for Turkish imports. Turkey needs formal and informal institutional flexibility to prioritise social welfare spending and fixed capital investments by the public sector, rather than an exclusive preoccupation with price stability via monetary and fiscal discipline.

Bargaining with Multinationals: Why State Capacity Matters

Dominant models of bargaining between states and multinational corporations (MNCs) have widely held that bargaining relations, especially in high-technology manufacturing, have changed from confrontational to cooperative. It is consequently argued that there is little formal entry bargaining among these actors. However, there are three primary weaknesses in this literature. First, the understanding of outcomes is limited to the terms of investment agreements. This static view ignores the dynamics of bargaining processes and decisions not to invest, which also deserve explanation. Second, it is MNC-centric, ignoring states privileged role in relation to the governance of entry bargaining in domestic policy-making processes. Third, it views state as a monolithic entity, ignoring the bargaining that occurs inside states. To redress these issues, this article offers a state-centric bargaining model. It identifies administrative and institutional capacity as two critical components of state capacity. It chooses the entry bargaining from 2005, when Hyundai Motors Corporation considered establishing a USD1.5 billion car-manufacturing plant in Turkey. It shows that state capacity in the governance of a domestic policy-making process affects the outcome of entry bargaining: When state capacity is weak, an MNCs decision not to invest is a more likely outcome.

When, why and how institutional change takes place: a systematic review and a future research agenda on the importance of policy entrepreneurship in macroeconomic bureaucracies

Abstract Political science and public policy scholars have long emphasised the importance of understanding institutional change and policy entrepreneurship. This review article is a response to this call in the context of reform in macroeconomic bureaucracies. Adopting a ‘systematic’ approach to reviewing the literature, this paper investigates when, why and how institutional reform in key monetary and fiscal macroeconomic bureaucracies (i.e. central banks, treasuries, and ministries of finance) takes place. It reviews 29 selected articles on reforms in these bureaucracies published in Thomson & Reuters Web of Knowledge’s Social Science Citation Index, JSTOR, Sage and Wiley databases from 1980 to 2015. It shows that the current state of knowledge about institutional change in key macroeconomic bureaucracies is characterised by a lack of sufficient bridge-building among variants of institutional approaches as well as between institutional theory and public policy theory, resulting in persistent knowledge gaps. Against this background, the present review contributes to the body of knowledge on this topic in two main areas. First, it reviews the literature systematically to provide an overview of the key theoretical and empirical characteristics of when, how and why institutional reform takes place in these bureaucracies. Second, it identifies gaps and future avenues of research to stimulate progress in this important area of study.

Institutional Theory and Varieties of National Financial Systems

The aim of this book is to examine how and why multiple structures, institutions and agents interact in informing bank behaviour and financial system resilience, and institutional change and persistence. To that end, the SIA framework and typological theory of bank behaviour have been developed to carry out the analysis and were introduced in Chapter 1. They emerge from an inductive research and benefit from institutional theory and public policy literature that deal with institutional and policy change processes. In this regard, this book also takes an important step toward building bridges among these academic fields. Thus, it is important to locate this book in the broader literature about the variants of institutional analysis and in the literature of comparative public policy and political economy of national financial systems which utilise an institutional analysis.

Institutional and Policy Change: Meta-theory and Method

This volume emerged from a general call for papers for a panel on institutional entrepreneurship and institutional change at the International Conference on Public Policy (ICPP) held in Milan, Italy, in the summer of 2015. We were overwhelmed by submissions to the panel and a level of interest in the topic which far exceeded our expectations. In retrospect, we should not have been surprised. Issues of institutional change continue to be of central concern to political scientists, economists, sociologists, and policy scholars alike—indeed, why and how institutions emerge, change, or are transcended over time is a core theoretical question at the centre of most social science inquiry.

The Sources and Consequences of Bank Behaviour

The previous chapters have shown that this book is an attempt to understand and analyse Australian exceptionalism, to demonstrate the utility of the SIA framework utilising interactions among structures, institutions and agents with special reference to its application to the Australian bank behaviour in a comparative perspective. The aim is to spark a debate towards sufficient understanding of differences and similarities in bank behaviour and institutional outcomes within and across varieties of capitalism. The conceptual framework offered suggests a perspective that incorporates interactions between various structural and institutional complementarities and agents and their impact on bank behaviour and socioeconomic performance.

The Political Economy of Competition Regulation in Australia

The government fully accepted 113 of 115 recommendations made by the Wallis Committee; recommendations 82 and 83 which advanced the four largest banks’ (or the majors) interests on the merger issue were not accepted by the government. One institutional aspect of this regulatory framework was the power granted to the Treasurer under the Banking Act and the Insurance Act to determine whether or not mergers among the largest financial firms can take place.1 Number 82 recommended that ‘The Trade Practices Act (TPA) should provide the only competition regulation of financial system mergers’ (Treasury, 1997: 425, emphasis added). In doing so, the Treasurer’s power over mergers under banking and insurance laws could be removed. Number 83 advocated removal of the ‘six pillars’ policy — a government ban on in-market mergers between the four largest banks and two insurance companies. The ‘six pillars’ policy had prevented three different types of potential mergers: mergers among the four largest banks; mergers between the largest two insurance companies; and mergers among any of the four largest banks and the largest two insurance companies. Instead, it replaced the ‘six pillars’ policy with the ‘four pillars’ policy, which continued to block mergers among the major banks while allowing mergers between any one of the big banks and the two big insurance companies.

The Political Economy of Prudential Regulation in Australia

On 2 March 1996, the Liberal Party won its first federal election after 13 years of ALP rule in Australia. On 30 May 1996, one of the first acts of Peter Costello, Treasurer of the Howard Coalition government, was to establish the third major financial system inquiry (FSI) to review the Australian financial system (later known as the Wallis Inquiry).1 The Wallis Inquiry was important in the new era of financial regulatory change in Australia because it aimed to address the issues of whether, and if so how, the supervisory and regulatory arrangements at the time should be reorganised to address future challenges. One year later, on 18 March 1997, the Wallis Committee submitted its 700-page final report containing 115 recommendations to the government. Two of the more controversial recommendations of the Committee concerning prudential regulation were numbers 31 and 32. The former recommended the creation of a single prudential regulator to replace the RBA, the Insurance and Superannuation Commission (ISC) and the Australian Financial Institutions Commission (AFIC) while the latter said that this agency should not be the RBA. Following the government’s adoption of these recommendations, Australia became the first country in the world to adopt a functionally-based financial supervisory/regulatory framework, the so-called ‘twin peaks’ model.

Sources of Bank Behaviour and Institutional Change: Interactions among Structures, Institutions and Agents

Bank behaviour shapes the fate of national financial systems and national welfare. The global financial crisis (GFC) has reminded us that the nature of bank behaviour is crucial for systemic stability, national output, employment, economic growth and development in any economy. Specifically, financial system resilience and fragility are outcomes which are often the result of bank behaviour. This book offers a typological theory that distinguishes the conditions under which conservative and opportunistic types of bank behaviour may lead to these outcomes. Conservative behaviours favour prudent bank decisions and actions that increase the resilience of financial systems to weather domestic and/or international crises. Opportunistic behaviours refer to excessive risk-taking in bank decision and actions that reduce the resilience of financial systems to weather such crises. This book identifies minimal within-type variance and maximum between-type variations of these types of bank behaviour.