Financialisation and the financial and economic crises: the case of Turkey

This study aims to evaluate the relationship between the real sector and the financial sector in the era of neoliberalism. To this end, we focus on the implications of financial developments for the main macroeconomic variables, including consumption, investment and income distribution. We also explore the impacts of the recent crisis on Turkish economy and the policies taken in response to the crisis. The overall findings of this report provide considerable support to four interrelated arguments. First, many well established properties of financialisation in advanced countries are not found in the Turkish case. Second, as opposed to domestically driven financialisation tendencies, financial flows, a part of global financialisation, have dominated important trends in the Turkish economy. Third, under the significant influence of financial flows, in general, the Turkish economy has shown a debt-led consumption boom type growth. Fourth, although the role of the export shock in explaining the impact of the recent crisis on the Turkish economy is very distinctive, the role of financial flows in the recent and especially previous crises are very important as well.