State responses to oil crisis in oil-dependent developing countries: South Korea and Turkey after the 1973 oil crisis

Abstract

AbstractWhy do oil-dependent developing countries exhibit divergent responses to oil crises? This study employs a comparative case study approach and utilizes a ‘most similar system design’ to examine the varying state responses to the 1973 oil shock in Turkey and South Korea. While the former refrained from implementing radical short-term adjustment policies and reforms, the latter adopted proactive measures to mitigate the worsening impact of escalating oil prices. This research contends that the existing literature, which emphasizes distinctions in industrialization strategies and fiscal policies among developing nations, offers an incomplete explanation for the divergent reactions of states to external price shocks. Instead, the study proposes a sociological perspective, focusing on the influence of varying degrees of state autonomy and the characteristics of bureaucratic systems on the decision-making processes of states. The key finding suggests that while pre-crisis economic policies and industrialization strategies may limit the array of policy tools available to counteract the adverse effects of an oil crisis, the extent of state autonomy and the organization of the bureaucracy – whether adhering to Weberian or non-Weberian principles – impact the efficacy of these policy tools and the determination of decision-makers to act in the best interests of the long-term public good.