Political Economy of Public Policy Reform in Pre-Accession States: The Case of Budgetary Policy and Governance in Turkey

After experiencing the worst economic setback in history, Turkey’s macroeconomic fundamentals witnessed a dramatic turnaround in the 2000s. The existing literature on Turkey generally attributes these changes to the transformative power of the EU by pointing to the correlation between economic recovery following the 2001 crisis and deepening relations with the EU without investigating further the causal mechanisms resulting in policy reversal. This paper, however, problematizes the alleged impact of the EU relying on a ‘bottom-up’ research design characteristic of the recent wave of Europeanization studies. After providing an overview of the changing macroeconomic policy and governance in Turkey during the past decade, the paper, first, reviews the literature on potential drivers of budgetary reform in pre-accession countries drawing on global, EU-level and domestic factors. Second, it traces changes in budgetary policy and governance through a ‘policy structure’ approach focusing on changes in the principles, objectives, procedures and instruments characterizing budgetary policy and governance. Third, the paper unpacks change through analyzing the interplay of domestic institutions, powerful ideas and dominant actors. In doing so it relies on the ‘process tracing’ technique involving a review of programming and legislative documents, qualitative interviews with key policymakers and representatives of big business, and a survey of print media. By identifying a set of conditions for policy reform and social mechanisms in the political economy of policy reform, the paper concludes by critically re-evaluating the relative causal powers of globalization, Europeanization, and domestic factors in accounting for continuity and change in budgetary policy and governance.