The Turkish Variety of State-Permeated Capitalism and Mutually Dependent State-Business Relations

Abstract

ABSTRACT Scholarship on the varieties of capitalism in emerging economies underlines the critical role states play in the political economy of development. This research suggests that “state capitalism” or “state-permeated capitalism” is the most common economic development model among large emerging economies. One of the distinguishing features of these emerging economies is that informal state–business ties are the backbone of their development models. However, more needs to be known about the type, nature and evolution of state–business relations that guide emerging economic development trajectories and their implications for varieties of capitalism within state- permeated market economies. This article situates Turkey within the state capitalism debate by examining the historical legacy of “mutually dependent” state–business ties that have characterised the Turkish political economy and how these ties took a different form under the domination of the Justice and Development Party (Adalet ve Kalkınma Partisi – AKP) since 2002. Related, the article investigates the emergence and evolution of two ideologically distant business groups MÜSİAD and TÜSİAD in the context of changing political economy dynamics, their relations with political authorities and the conflicting positions they have taken for vital economic policies and political reforms during the AKP rule.