Economic Diplomacy for Competitiveness: Globalization and Turkey’s New Foreign Policy

Abstract

This article aims to fill the methodological gap in the conventional IR literature by assessing the recent trajectory of Turkish foreign policy from the prism of international political economy, in particular global competitiveness. A holistic and interdisciplinary approach is adopted that incorporates critical insights from the disciplines of political science, international relations, economics, and development studies. The major parameters of Turkey’s structural transformation from an inward-looking, import-substituting economic and political system to a liberal export-promoting strategy are evaluated in line with the first- and second-generation neoliberal reforms in the 1980s and the 2000s, respectively. Meanwhile, the impact of economic globalization on the multifaceted processes of state transformation and the ascendancy of economic issues to the level of ‘high-politics’ in the post-Cold War era are emphasized, with special reference to the pursuit of economic diplomacy and ‘neo-protectionist’ science and technology policies by both industrialized and industrializing countries. The major caveats of accelerated global integration for Turkey’s ‘new foreign policy’ and principal policy challenges in the realms of macroeconomic management and foreign policy making are also identified

Keywords

• Turkish foreign policy, economic diplomacy, neo-protectionism, competitiveness.

References

1. Ziya Öniş, “Turkey and the Middle East After September 11: The Importance of the EU Dimension”, Turkish Policy Quarterly, Vol. 2, No. 4 (Winter 2003), pp.83-92; Mustafa Aydın and Sinem Açıkmeşe, “Europeanization through EU Conditionality: Understanding the New Era in Turkish Foreign Policy”, Journal of Southeastern European and Black Sea Studies, Vol. 9, No. 3 (2007); pp. 273-285; Fuat Keyman and Senem Aydın, “European Integration and the Transformation of Turkish Democracy”, CEPS, EU-Turkey Working Papers, No. 2 (August 2004), pp.1-56.
2. Burhanettin Duran, “JDP and Foreign Policy as an Agent of Transformation”, in Hakan Yavuz (ed.), “The Emergence of a New Turkey: Democracy and the AK Parti”, Salt Lake City, University of Utah Press, 2006, pp. 66-87; Meliha Benli Altunışık, “Worldviews and Turkish Foreign Policy in the Middle East”, New Perspectives on Turkey, No. 40 (Spring 2009), pp. 171-194.
3. Ahmet Davutoğlu, Stratejik Derinlik, Istanbul, Küre Yayınları, 2001; Ali Karaosmanoğlu, “The Evolution of the National Security Culture and the Military in Turkey”, Journal of International Affairs, Vol. 54, No. 1 (Fall 2000), pp. 199-216; Sabri Sayarı, “Turkish Foreign Policy in the Post-Cold War Era”, Journal of International Affairs, Vol. 54, No. 1 (Fall 2000), pp. 169-182.
4. Tarık Oğuzlu, “Soft Power in Turkish Foreign Policy”, Australian Journal of International Affairs, Vol. 61, No. 1 (March 2007), pp. 81-97; Cengiz Çandar, “Turkey’s Soft Power Strategy: A New Vision for a Multipolar World”, SETA Analysis, No. 38 (December 2009).
5. This goal has been repeatedly raised by Prime Minister Recep Tayyip Erdoğan as well as various other ministers in the JDP government as a blueprint of success in Turkey’s ongoing structural transformation.
6. Şevket Pamuk, “Economic Change in Twentieth Century Turkey: Is the Glass More Than Half Full”, in Reşat Kasaba (ed.), Turkey in the Modern World, Cambridge, Cambridge University Press, 2007, pp. 266-300.
7. For detailed information on Turkey’s fundamental macroeconomic and social figures over the course of the 20th century, see Pamuk, “Economic Change in Twentieth Century Turkey: Is the Glass More Than Half Full?”, Table 10.1., p. 267.
8. As for 2006, Turkey was the 17th largest economy in terms of its GDP, while it was located in the 84th position in the UN’s Human Development Index, far below many countries in East Asia and Latin America with comparable levels of development. See UNDP, Human Development Report 2007, New York, United Nations.

9. For various political economy analyses concentrating on the theoretical and practical manifestations of Turkish etatism, see Korkut Boratav, Türkiye’de Devletçilik, Ankara, Savaş Yayınevi, 1982; Yahya Tezel, Cumhuriyet Döneminin İktisadi Tarihi, Ankara, Yurt Yayınevi, 1982; Yakup Kepenek and Nurhan Yentürk, Türkiye Ekonomisi, Istanbul, Remzi Kitabevi, 2009.
10. Sadık Ünay, Neoliberal Globalization and Institutional Reform: Political Economy of Development Planning in Turkey, New York, Nova Publishers, 2006, pp. 53-81.
11. The Nobel Prize-winning Dutch-American economist Jan Tinbergen played a prominent role in laying the foundations for the State Planning Organization and the planning regime in line with the premises of the dominant structuralist approach at the time.
12. For historically-informed accounts of major policy shifts and dynamics of continuity and transformation in Turkish political economy over the course of the Republican era, see Pamuk, “Economic Change in Twentieth Century Turkey?”, pp. 266-300; Ziya Öniş and Fikret Şenses, “Global Dynamics, Domestic Coalitions and a Reactive State: Major Policy Shifts in Post-War Turkish Economic Development”, METU Studies in Development, Vol. 34, No. 2 (2007), pp. 251-286.
13. For a comprehensive survey of early Turkish neoliberalism with special reference to the economic preferences and the peculiar policy-making style of Turgut Özal, see Ziya Öniş, “Turgut Özal and His Economic Legacy: Turkish Neoliberalism in Critical Perspective”, Middle Eastern Studies, Vol. 40, No. 4 (2004), pp. 113-134.
14. Ahmet Ertuğrul and Faruk Selçuk, “A Brief Account of the Turkish Economy”, Russian and East European Finance and Trade, Vol. 37, No. 6 (November-December 2001), pp. 6-30.
15. Ziya Öniş and James Riedel, Economic Crises and Long-Term Growth in Turkey, Washington D.C., World Bank, 1993, p. 65.
16. Raimo Väyrynen, “Global Interdependence or the European Fortress? Technology Policies in Perspective”, Research Policy, Vol. 27, No. 4 (September 1998), pp. 627-637.
17. Linda Weiss and Elizabeth Thurbon, “The Business of Buying American: Government Procurement as Trade Strategy in the United States”, Review of International Political Economy, Vol. 13, No. 5 (December 2006), pp. 701–724.
18. William Hale, “Economic Issues in Turkish Policy”, in Alan Makovsky and Sabri Sayarı (eds.), Turkey’s New World: Changing Dynamics in Turkish Foreign Policy, Washington D.C., Institute for Near East Policy, 2000, pp. 20-39.
19. Mine Eder, “The Challenge of Globalization and Turkey’s Changing Political Economy”, in Barry Rubin and Kemal Kirişci (eds.), Turkey in World Politics: An Emerging Multiregional Power, Boulder, Lynne Rienner, 2001, p. 207.
20. Mustafa Aydın, “Twenty Years Before, Twenty Years After: Turkish Foreign Policy at the Threshold of the 21st Century”, in Tareq Ismael and Mustafa Aydın (eds.), Turkey’s Foreign Policy in the New Century: A Changing Role in World Politics, Aldershot, Ashgate, 2003, pp. 12-20.
21. Dani Rodrik, “Premature Liberalization, Incomplete Stabilization: The Özal Decade in Turkey”, in Michael Bruno et al., Lessons of Economic Stabilization and Its Aftermath, Cambridge, MIT Press, 1991, pp. 340-367.
22. Kemal Kirişci, “A Friendlier Schengen System as a Tool of ‘Soft Power’: The Experience of Turkey”, European Journal of Migration and Law, Vol. 7, No. 4 (2005), p. 352.
23. Ahmet Davutoğlu, “Turkey’s New Foreign Policy Vision: An Assesment of 2007”, Insight Turkey, Vol. 10, No. 1, (January- March 2008), p. 78.
24. Davutoğlu, Stratejik Derinlik, p. 25.
25. Zafer Çağlayan, “2010’da 110 Milyar Doları Aşacağız”, Turquie Diplomatique, February 2010. 29 Ibid.
26. This program was imposed by the IMF in the aftermath of the 2000-2001 twin crises as a blueprint for the transition to a strong regulatory framework particularly in the financial sector. Kemal Derviş, who was recruited from the World Bank to oversee the implemetation of the program, failed to attain his subsequent political ambitions, but the JDP government firmly established fiscal disipline and financial oversight required by the program as its own policy prerogatives.
27. Recently, concerns regarding a potantial marginalization of the organization has began to be raised in major platforms of TÜSİAD. For an analysis on the relative positioning of İstanbul- based bourgeoisie vis-a-vis Turkey’s new foreign policy under Davutoğlu, see Sadık Ünay, “Patronlar Yeni Dış Politikanın Neresinde?”, Anlayış, No. 81 (February 2010). pp.60-61.
28. Caner Bakır and Ziya Öniş, “The Emergence of the Regulatory State: The Political Economy of Turkish Banking Reforms in the Age of Post-Washington Consensus”, Development and Change, Vol. 41, No. 1 (January 2010), pp. 77-106.
29. There is an increasing tendency in the political science and economics literatures to cite the BRIC countries (Brazil, Russia, India and China) as the leading economic and political powers of the 21st century. Turkey’s President Abdullah Gül once commented that Turkey could also be included in that group in the near future, by adopting the shorthand BRICT (BRIC plus Turkey).
30. For instance, despite frequent collaboration between the Ministry of Foreign Affairs and the Undersecretariat of Treasury on the level of leadership and basic principles, there is still a need for an institutionalized framework and pilot organizations focused on the governance of international economic issues, coordination of main economic and foreign policy decisions and promotion of Turkey’s high-technology/high-value added sectors in international platforms such as the METI in Japan or the Economic Planning Board in Korea.
31. To illustrate, the main policy priority of the Central Bank has been macroeconomic stability and non-inflationary growth, while institutions dealing with the real economy such as the State Planning Organization or Ministry of Trade and Industry tend to focus on issues such as production capacity, employment creation and export potential. There is also a need to formulate policies for local-regional socio-economic development and international trade/ competitiveness in a complementary manner.
32. Ziya Öniş and İsmail Emre Bayram, “Temporary Star or Emerging Tiger? The Recent Economic Performance of Turkey in a Global Setting”, New Perspectives on Turkey, No. 39 (Fall 2008), pp. 47-82.
33. For instance, Turkey’s largest white-goods company Arçelik, owned by Koç Holding Conglomerate, is renowned as the single most important center of innovation and creation of patents in the Turkish manufacturing industry. Yet, one needs to add the reservation that large companies such as Arçelik and Vestel are frequently accused of exaggerating the number of their R&D personnel, the extent of their R&D facilities and patent numbers in order to increase the inflow of various incentives from governmental sources.
34. For a detailed analysis on this, see Sadık Ünay, “Ticaret Savaşları ve Ulusal Çıkarlar: Bir Uluslararası Çatışma Alanı Olarak Uluslararası Ticaret”, in Kemal İnat and Burhanettin Duran (eds.), Dünya Çatışmaları: Çatışma Bölgeleri ve Konuları, Istanbul, Nobel, 2010, pp. 639-665; Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective, London, Anthem Press, 2002.
35. The peculiar experiment with the Ottoman Debt Administration (Duyun-u Umumiye), which was formed by foreign creditors and rivalled the Ottoman Finance Ministry over time, embodies the importance of economic independence in the collective memories of Turkish statesmen.
36. See Nicholas Bayne, “Economic Diplomacy for Developing Countries”, in Nicholas Bayne and Stephen Woolcock (eds.), The New Economic Diplomacy: Decision-Making and Negotiation in International Economic Relations, Aldershot, Ashgate, 2003, pp. 64-83.
37. See Ulrike Schaede and William Grimes (eds.), Japan’s Managed Globalization, New York, M.E. Sharpe, 2003, pp. 25-38; Alice Amsden and Wan-Wen Chu, Beyond Late Development, Cambridge, MIT Press, 2003, pp. 50-61; Linda Weiss, “Bringing Domestic Institutions Back In”, in Linda Weiss (ed.), States in the Global Economy, Cambridge, Cambridge University Press, 2003, pp. 1-36; Saadia M. Pekkanen, Picking Winners? From Technology Catch-up to the Space-Race in Japan, Stanford, Stanford University Press, 2003.
38. Weiss and Thurbon, “The Business of Buying American”, pp. 701–724.
39. For detailed comparative data, see World Bank, World Development Report 2007, Washington DC.