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Unformatted text preview: 193 Neoliberal Global Remedies: From Speculative-Led Growth to IMF-Led Crisis in Turkey Review of Radical Political Economics , Volume 38, No. 2, Spring 2006, 193-213 DOI: 10.1177/0486613405285423 © 2006 Union for Radical Political Economics Abstract Turkey experienced a severe economic and political crisis in November 2000, and again in February 2001. The IMF has been involved with the macro management of the Turkish economy both prior to and after the crisis, and provided financial assistance of $20.4 billion, net, between 1999 and 2003. The offi- cial stance is that the crisis was the result of the failure of the public sector to maintain the austerity tar- gets and the failure to fully implement the free market rationale of globalization. I argue in this article, however, that contrary to the official wisdom, the current economic and political crisis is not the end result of a set of technical errors or administrative mismanagement unique to Turkey, but is the result of a series of pressures emanating from the process of integration with the global capital markets. I document the fragility indicators of the Turkish financial and fiscal system, and show that the IMF program led to an increase in vulnerability of the financial system throughout 2000-2001. I further argue that the recent wave of structural reforms destined for stability and credibility serve, in fact, mainly the interests of foreign finance capital, and primarily aim at securing the debt obligations of the Turkish arbiters. JEL classification: E6; F3; O1; O52 Keywords: economic and political crisis; Turkey; speculation-led growth; globalization; stabilization; IMF conditionality 1. Introduction At the turn of the millennium, the neoliberal orthodoxy juxtaposed a new set of condi- tionality as part of its hegemonic agenda on the developing world: privatization, flexible labor markets, financial deregulation, central bank independence, flexible exchange rate regimes, and fiscal austerity. To this end, integration of the developing nation-economies into the evolving world financial system has already been achieved through a series of policies aimed at liberalizing their financial sectors and privatizing major industries. Furthermore, the state apparatus had to be transformed to facilitate the hegemony of international finance capital. ERINC YELDAN Department of Economics, Bilkent University, Ankara, 06800, Turkey; e-mail: [email protected] Received December 23, 2003; accepted May 5, 2005 The neoliberal ideology attempted to explain the motives behind financial liberalization, arguing that such measures would restore growth and stability by raising savings and improv- ing economic efficiency. Accordingly, as the “strangulation” of the so-called financial repres- sion was dismantled, loanable funds would expand, real cost of credit would fall, and the consequent increases in the pace of capital accumulation would generate sustained growth....
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This note was uploaded on 08/06/2009 for the course ECONOMICS ECON424 taught by Professor Alperduman during the Spring '09 term at Izmir University of Economics.
- Spring '09