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Rushing toward currency convertibility

Published online by Cambridge University Press:  05 March 2015

Kurtuluş Gemici
Kurtuluş Gemici*
Affiliation:
National University of Singapore, Department of Sociology, AS1, 11 Arts Link, 117570, Singapore, [email protected]
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Abstract

In 1989, Turkey became one of the first—and few—emerging economies to fully liberalize its capital account. Given the adverse macro-economic conditions before the reforms, it is puzzling that Turkish policy-makers implemented policies amounting to a comprehensive and imprudent capital account liberalization. Using in-depth interviews with a significant number of key decision-makers behind capital account liberalization and employing archival material from news sources on the debates surrounding the reform process, this article examines the policy objectives and rationale behind the Turkish capital account liberalization. The main argument is that capital account liberalization represented a political rationality that put a premium on short-term expansion through funds from the rest of the world. This liberalization was a policy response to decreasing rates of economic growth and demands from organized labor and public employees for better working conditions and higher wages. Thus, this article shows that these distributional conflicts and the trajectory of economic growth were important determinants of the timing and scope of capital account liberalization in Turkey.

Keywords

Capital account liberalizationcurrency convertibilityfinancial openingTurkeyneoliberalism
Type
Articles
Information
New Perspectives on Turkey , Volume 47: Special Issue on Turkey's Experience with Neoliberal Policies and Globalization , Fall 2012 , pp. 33 - 55
Copyright
Copyright © New Perspectives on Turkey 2012

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