Mehmet Ugur

Corporate governance in Turkey: an overview and some policy recommendations

Both international and domestic developments have combined to bring the corporate governance (CG) debate to the fore in Turkey. Given this increased interest in CG matters and the significance of Turkey as an emerging market, we provide an overview of the Turkish CG framework with two objectives in mind: (i) contributing to the growing CG literature by presenting the main aspects of the CG practice in Turkey, and (ii) locating the Turkish CG reform agenda within the global debate – especially as it relates to the practice in emerging markets. We begin with a review of the CG debate as it relates to emerging markets. We then provide an account of the socio‐economic environment within which the Turkish CG debate is unfolding. This is followed by an examination of the external (market‐related) and internal (firm‐related) dimensions of the Turkish CG framework. Finally, we summarize the main findings and offer some recommendations for a successful reform initiative in Turkey.

CORRUPTION'S DIRECT EFFECTS ON PER‐CAPITA INCOME GROWTH: A META‐ANALYSIS

Corruption is a symptom of weak institutional quality and could have potentially adverse effects on economic growth. However, heterogeneity in reported findings makes it difficult to synthesize the evidence base with a view to test competing hypotheses and/or support evidence-based policy and practice. To address this issue, we have extracted 327 estimates of corruptions direct effect on per-capita GDP growth from 29 primary studies, following a peer-reviewed and pre-published systematic review protocol. Precision-effect and funnel asymmetry tests indicate that corruption has a negative effect on per-capita GDP growth after controlling for publication selection bias and within-study dependence. However, multivariate meta-regression analysis results indicate that the overall effect is not robust to inclusion of moderating variables through a general-to-specific procedure for model specification. We report that the marginal effect of corruption on per-capita GDP growth is more adverse when the primary study estimates relate to long-run growth, are based on low-income-country data only, and extracted from journal papers. The effect is less adverse in studies that use the International Country Risk Guide corruption perceptions index and in those reporting estimates from two-stage least-squares estimations.

Open-Ended Membership Prospect and Commitment Credibility: Explaining the Deadlock in EU-Turkey Accession Negotiations

After the enlargement of 2004, the European Union (EU) has introduced an open-ended framework for accession negotiations. Although the ultimate aim is still to ensure the integration of candidate countries, the timing and modality of membership is not guaranteed in advance. This article utilizes a political economy model to demonstrate that open-ended accession negotiations would lead to suboptimal outcomes in the form of inadequate convergence reforms undertaken in the candidate country and poor membership prospect offered by the EU. This analytical finding is compatible with and can be useful in understanding the dynamics of deteriorating reform output in Turkey and weakening EU commitment to Turkish membership since the start of the open-ended accession negotiations process in 2005. Two necessary conditions must be satisfied to overcome such adverse outcomes in the enlargement process: (i) the EU and the accession country must renew their commitments to reform and integration through a new political bargain; and (ii) they should follow this bargain with periodic summits for co-ordinating their commitments in the face of shocks to, or emerging deadlocks in, the process of open-ended accession negotiations.

Can the EU Anchor Policy Reform in Third Countries? An Analysis of the Euro-Med Partnership

The emerging literature on ‘anchoring’ draws attention to non-conventional benefits of regional integration arrangements, which include increased policy credibility. Nevertheless, this literature tends to view the anchoring of policy reform as an exogenously given option for a reforming country. We demonstrate that anchoring is an endogenously determined choice, which may guarantee neither optimal levels of policy reform nor effective anchoring unless the relevant contracts are both complete and incentive compatible. We examine the economic pillar of the Euro-Med Partnership (EMP) to ascertain the extent to which its contractual provisions satisfy these conditions. Our findings suggest that the EMP leaves too much room for discretion and does not internalize the positive externalities associated with policy reform. These findings enable us to elaborate on why the EU cannot be expected to function as an effective anchor for policy reform for its trading partners.The emerging literature on ‘anchoring’ draws attention to non-conventional benefits of regional integration arrangements, which include increased policy credibility. Nevertheless, this literature tends to view the anchoring of policy reform as an exogenously given option for a reforming country. We demonstrate that anchoring is an endogenously determined choice, which may guarantee neither optimal levels of policy reform nor effective anchoring unless the relevant contracts are both complete and incentive compatible. We examine the economic pillar of the Euro-Med Partnership (EMP) to ascertain the extent to which its contractual provisions satisfy these conditions. Our findings suggest that the EMP leaves too much room for discretion and does not internalize the positive externalities associated with policy reform. These findings enable us to elaborate on why the EU cannot be expected to function as an effective anchor for policy reform for its trading partners.

Freedom of movement vs. exclusion: a reinterpretation of the "insider"-"outsider" divide in the European Union.

This article argues that the question of free movement vs. exclusion within the European Union (EU) can be addressed satisfactorily only if we move away from the narrow state-centrism inherent in the current debate. What is required is to ‘open’ the state concept and examine the implications of state-society relations for EU policymaking. Once this is done, it can be seen that the exclusionist stance of the immigration policy and the essentially intergovernmental nature of the policymaking are due to an implicit contract between states and constituents implied by the concepts of nationality and citizenship. According to this perspective, the focus on the state or the political elite alone is too one-sided and misses the more complex factors bearing upon EU policymaking in this area.

On Stability of the Demand for Money in a Developing OECD Country: The Case of Turkey

This paper empirically analyses the stability of the narrow money demand function (M1) in Turkey for the period 1950-2002. As part of the IMF-sponsored stabilisation programme, Turkey has been pursuing base money targets. To ascertain whether this policy framework satisfies the necessary condition for effectiveness, we estimate and test for the stability of Turkish M1 by employing a recent single cointegration procedure proposed by Pesaran et al. (2001) along with the CUSUM and CUSUMSQ stability tests. We demonstrate that there is a stable money demand function and it could be used as an intermediate target of monetary policy in Turkey.

Testing Times in EU-Turkey Relations: The Road to Copenhagen and Beyond

In this article, I will examine the post-Helsinki period in EU-Turkey relations with a view to address two questions. First, has the Helsinki decision been effective in resolving the anchor/credibility dilemma in EU-Turkey relations? Second, what has changed between the Helsinki decision of 1999 and Copenhagen decision of 2002? To address these questions, the article is organised as follows. Section 1 examines the run-up and aftermath of the Helsinki summit. In this section, it will be argued that the Helsinki decision was a step that has mitigated the anchor/credibility dilemma, but this step could have been taken two years earlier in Luxembourg. Section 2 explains why the conditional date given in the Copenhagen summit was to be expected and why Turkey’s negative reaction to EU’s offer was driven by Turkey’s reluctance to resolve the Greco-Turkish disputes and Cyprus problem rather than its enthusiasm for integration with Europe. The evidence examined in section 1 and 2 suggests that Turkey is essentially a ‘reluctant European’ and that the Helsinki and Copenhagen decisions have set up a gambit that will force Turkey to show its hand on two major issues: the Cyprus problem and disputes with Greece. Finally, the conclusions section will highlight the main findings and conclude with the argument that the credibility of Turkey’s democratisation and the future of EU-Turkey relations in the post-Copenhagen period will hinge largely on whether the Turkish military will accept a role similar to its counterparts in EU countries or whether it will stage a showdown against the EU itself as well as against growing domestic pressure for change.

Can the EU anchor policy reform? The case of the Euro-Med Partnership

The emerging literature on ‘anchoring’ draws attention to non-conventional benefits of regional integration arrangements, which include increased policy credibility. Nevertheless, this literature tends to view the anchoring of policy reform as an exogenously given option for a reforming country. We demonstrate that anchoring is an endogenously determined choice, which may guarantee neither optimal levels of policy reform nor effective anchoring unless the relevant contracts are both complete and incentive compatible. We examine the economic pillar of the Euro-Med Partnership (EMP) to ascertain the extent to which its contractual provisions satisfy these conditions. Our findings suggest that the EMP leaves too much room for discretion and does not internalize the positive externalities associated with policy reform. These findings enable us to elaborate on why the EU cannot be expected to function as an effective anchor for policy reform for its trading partners.The emerging literature on ‘anchoring’ draws attention to non-conventional benefits of regional integration arrangements, which include increased policy credibility. Nevertheless, this literature tends to view the anchoring of policy reform as an exogenously given option for a reforming country. We demonstrate that anchoring is an endogenously determined choice, which may guarantee neither optimal levels of policy reform nor effective anchoring unless the relevant contracts are both complete and incentive compatible. We examine the economic pillar of the Euro-Med Partnership (EMP) to ascertain the extent to which its contractual provisions satisfy these conditions. Our findings suggest that the EMP leaves too much room for discretion and does not internalize the positive externalities associated with policy reform. These findings enable us to elaborate on why the EU cannot be expected to function as an effective anchor for policy reform for its trading partners.

Regulatory Quality and Performance in EU Network Industries: Evidence on Telecommunications, Gas and Electricity

This article provides empirical evidence on ex ante and ex post indicators of regulatory quality and the relationship between those indicators and market performance in liberalised EU-15 network industries. We report a low level of regulatory independence and competence, a high level of cross-country variations in regulatory quality, and a prevalent absence of correlation between ex ante regulatory quality and ex post performance indicators. On the basis of these findings, we suggest that the design of national regulatory agencies (NRAs) in Europe is not optimal and may be conducive to regulatory ineffectiveness or outright regulatory failure. Nevertheless, the existence and strengthening of EU-level regulators could enable EU member states to reduce the risk of regulatory failure by encouraging coordination and adoption of best practice.

Institutions and Economic Performance: A Review of the Theory and Evidence

The aim of this article is to take stock of the theoretical debate and empirical findings concerning the impact of institutions on economic performance and the channels through which the institutional impact unfolds. The review is limited to work published until 2004 due to space limitations and the exponential increase in the literature after 2004 – a development that justifies a separate review in itself. We trace the evolution of the institutional approach, identify the channels through which institutional quality might affect economic performance, report the empirical findings, and assess the institutional approach’s contribution to economic analysis and policy design. Our findings suggest that the institutional approach has made both theoretical and empirical contributions to economics research and has inspired policy debate, but the debate is lopsided with its focus on developing countries only.