Analysis & Opinions - Economic Research Forum

Local winners and losers in Erdoğan’s Turkey

| June 19, 2018

Throughout the 2000s, Turkey was portrayed as a model of social and economic success for other countries in the MENA region. Ahead of the country’s early presidential and parliamentary polls, this column reports research evidence on how the ruling Justice and Development Party has managed public resources and fostered local economic development since it took power in 2002. The government has played a substantial role in influencing local economic performance on a discretionary basis.

Turkey’s snap elections, which could potentially beef up the powers of President Recep Tayyip Erdoğan, come amid significant macroeconomic turmoil. In May, inflation climbed to more than 12% on an annual basis, while the Turkish lira has lost almost 20% of its value against the dollar and the euro since the start of the year.

International analysts, such as Moody’s, are also significantly reconsidering growth forecasts. In recent analysis, Acemoglu and Ucer (2017) point out how this macroeconomic deterioration follows an ominous slide in the quality of the country’s economic and political institutions.

As fears persist over the strength of Turkey’s economy, what can be said about how the ruling Justice and Development Party (AKP) has managed public resources and fostered local economic development since it came to power in 2002? New empirical analyses indicate that the AKP has systematically ‘picked’ local economic winners and losers, by strategically allocating public monies and resources to provinces for particular electoral reasons.

Turkey’s public finances are highly centralised. For example, in 2005, the share of tax revenue of local governments in total tax revenue amounted to just 7.6% – that is, nearly a quarter of the share in Spain, half of Mexico’s and one third of the average across OECD countries (Blöchliger and Rabesona, 2009).

This strong centralisation of public finances offers Turkey’s national governments a chance to manage and target public resources in an arbitrary way beyond principles of ‘good governance’ (Kalaycioğlu, 2001). The AKP has been no exception, with its skilful mastery over the use of the government purse to punish and reward voters. The party’s de facto control of the national parliament has only heightened the centre’s control over public finances.

In a recent study (Cammett et al, 2018), we explore the rising consolidation of power by the AKP through the lens of distributive politics, aiming to assess how the ruling party has deployed public monies towards distinct political ends. Our results indicate that the AKP has funnelled highly excludable goods to strongholds in order to retain core support while directing non-excludable goods to provinces where electoral races have been much closer.

The full text of this article and suggested further readings are available at the Economic Research Forum website, via the link below.

For more information on this publication: Belfer Communications Office
For Academic Citation: Cammett, Melani and Davide Luca.“ Local winners and losers in Erdoğan’s Turkey.” Economic Research Forum, June 19, 2018.

The Authors

Davide Luca