"Patterns of Adjustment in the Age of Finance: The Case of Turkey as a Peripheral Agent of Neoliberal Globalization" - by A. Erinç Yeldan
Following the 2000-01 crisis, Turkey implemented an orthodox strategy of raising interest rates and maintaining an overvalued exchange rate. But, contrary to the traditional stabilization packages that aim to increase interest rates to constrain domestic demand, the new orthodoxy aimed at maintaining high interest rates to attract speculative foreign capital. The end result was shrinkage of the public sector, deteriorating education and health infrastructure, and failure to provide basic social services to the middle class and the poor. Furthermore, as the domestic industry intensified its import dependence, it was forced to adapt increasingly capital-intensive foreign technologies with adverse consequences on domestic employment. In the meantime, transnational companies and international finance institutions have become the real governors of the country, with implicit veto power over any economic and/or political decision that is likely to act against the interests of global capital.
The post-crisis economic and political adjustments were overseen by the newly founded Justice and Development Party (AKP), which came to power in the November 2002 elections securing absolute majority in parliament. The AKP refurbished itself with a more friendly view towards the West, ready to do business with global finance capital and willing to auction off strategic public assets to transnational companies. A key characteristic of the post-2001 Turkish growth path has been its "jobless" nature. The rate of open unemployment that was 6.5% in 2000 increased to 10.3% in 2002 and remained at that plateau despite the rapid surges in GDP and exports. Open unemployment is a severe problem; in particular, open unemployment among the young urban labor force touched 26% by 2007
