The EU: Turkey's rusty anchor

Daron Acemo?lu, Turkey?s best shot at the Nobel Economics Prize, and Murat Üçer, who knows the Turkish economy better than anyone else, published the paper, ?The ups and downs of Turkish growth, 2002-2015: Political Dynamics, the European Union and the Institutional Slide,? on Oct. 5.

As any Turkey economist would tell you, the country?s growth performance under the Justice and Development Party (AKP) could be divided into two distinct episodes: Following the 2001 crisis, the economy enjoyed five years of high economic growth, which then slowed considerably. Some have related this slowdown to the global crisis, but the loss in momentum started before.

Acemo?lu and Üçer argue that the surge in growth was caused mainly by institutional changes and reforms, such as central bank independence, delegation of decision-making to autonomous agencies to cultivate rules over discretion and ?transparency in the notoriously corrupt government procurement procedures.?

These same institutions and reforms were reversed after 2007. Laws were passed to limit the independence of autonomous agencies, which were duly filled with cronies. ?More and more industries and items were declared exempt? from the procurement law. Discretion began to rule over the rule of law. President Recep Tayyip Erdo?an went as far as labeling Governor Erdem Ba?ç? a traitor for not cutting interest rates.

Acemo?lu and Üçer note that some of these reforms were imposed by the IMF program after the crisis, and reversed as soon as it ended. But they also argue, building on the former?s well-known book ?Why Nations Fail,? that ?both the initial improvements in economic institutions and their subsequence slide are related to political factors.?

They emphasize...