A Comparative Study on Turkey under Globalization: Premature Deindustrialization and Institutional Transformations

Abstract: This paper investigates Dani Rodrik’s argument about premature deindustrialization processes in developing countries and its political repercussions for these countries with a focus on Turkey. Premature deindustrialization is defined as a fall of real MVA and employment shares of manufacturing at levels much lower than the developed countries experienced in the past. The consequences of this phenomenon can include financial instability, increasing trade deficits, persistent unemployment at high levels and decline of political rights for developing countries. Industrialization is suggested to be not only a growth model for classical-economics, but also a contributor for better economic institutions to counter the uneven wealth distribution that favors elites, who held most of political and economic power. In this paper premature deindustrialization and its effects are examined both qualitatively and quantitively with the existing literature and databases for developing countries. It concludes that manufacturing is still one of the most efficient sectors to sustain economic growth in longer time periods, thereby suggesting an alternative economic policy for developing countries including Turkey which have not succeeded to stabilize their economies or reached high income levels with market liberalization.