Changing modes of market integration, domestic developmental capacities and state-business alliances: insights from Turkey’s automotive industry

Abstract

This article investigates how different modes of transnational integration shape developmental state capacities in peripheral economies. The Turkish automotive industry serves as an ideal case to investigate this question. Turkey is a country that was exposed to different integration strategies, and we can trace the effects of these changing strategies on the evolution of developmental state capacities in a strategic sector. We make two arguments: first, we argue that the character of the domestic state-business alliance is an important factor that filters the effect of different modes of integration on developmental state capacities. Second, we argue that in cases with limited state autonomy the shallow mode of integration helps to increase the political and economic power of pre-existing rent-seeking alliances and with it, to consolidate the institutional status quo. Should the state be endowed with larger autonomy from vested interests, it helps to preserve the institutional status quo of at least some developmental capacities. By contrast, the deep mode can alter the domestic balance of forces and help to induce institutional changes leading to increased developmental capacities. Our dynamic analysis reveals important insights into the developmental advantages and disadvantages of different modes of integration.