The EU or national reform program for Turkey: Does the political feasibility depend on the EU’s absorption capacity?

Abstract

Concerns of the EU countries on Turkey's membership are summarized by the term 'EU's absorption capacity'. This implies that Turkey may end lip as a member of the EU or may not. Even the reform process can abruptly come to an end due to reasons irrespective of the performance of Turkey in a two-sector model, we show that despite this uncertainty, if before the start of the reform program a 'no' is perceived as less likely, the W-reform will be supported ex-ante. However, a 'no' at the midst of the EU reform program can block the reform process ex-post, since both of the sectors suddenly find themselves in a position that they should have not accepted beforehand Moreover, such a situation can render continuing with the alternative national reform program very hard. On the contrary, if the probability of a 'yes' is ex-ante perceived as less likely, the traditional sector opposes the EU reform process. However, if this perception is wrong and the true probability of a 'yes' is high, a reform program which if implemented would have been in the interests of both of the sectors ex-post, will not be implemented.