Sample Solution

restructuring of the Turkish political economy.” (Cammet p. 289)

There have been other crises since, however. The global financial crisis of 2008 affected Turkey, but it weathered it better than others. However, Turkey has experienced another crisis as recently as summer 2018. As it has throughout its history of industrialization, Turkey depends on importing capital, primary and intermediate goods in order to keep its industrial production going, (Oyvat p. 4). Its growth is therefore tied to rises in current account deficit, yet large investments have not led to a lasting technological change on a structural level that would lift Turkey’s industry, and economy out of its cyclical balance of payments trap (Oyvat p. 4-5). Instead, the current leadership (President Recep Tayyip Erdoğan and his Justice and Development Party) that has been in power since the 2001 crisis, has focused on policies that boost growth through various construction projects rather than foster industrial policies that focus on domestic value added, (Oyvat p. 5). The crisis of 2018, therefore was, “not merely an outcome of a political crisis instigated by Donald Trump. Turkey is now paying for the years of finance-led growth supported by speculative financial capital inflows, and a construction boom,” (Oyvat p. 10). Also, a key factor in the most recent crisis and what is important to prevent further economic downturn is to (re-)establish the autonomy of the central bank, (Kriwoluzky and Rieth p. 362).

Conclusion

Despite IMF involvement, the crises of 2000 and 2001 happened. It could be that the “volatile and reversible capital flows and the massive economic and social costs of speculative attacks result[ed] in massive outflows of capital”, meaning that some capital controls are needed for a true stabilization (Onis & Rubin, p 189). But to have prevented the 2001 crisis, and likely the 2000 crisis as well, rather than focusing its initial stabilization efforts on the current account deficit, it should have paid attention to the banking sector, which would have obviated the “November 2000 crisis [which] was primarily a crisis of the private banking sector,” and because the “February 2001 crisis stemmed from the disequilibrium in key components of the government-owned banking sector,” (Öniş p.13). So, it seems the banking sector was at the heart of both of these crises, and their inadequacy was the fault of the local political system and bo