Capital Fixity and Mobility in Response to the 2008-09 Crisis: Variegated Neoliberalism in Mexico and Turkey

The article examines the 2008-9 crisis responses in Mexico and Turkey as examples of variegated neoliberalism. The simultaneous interests of corporations and banks relative to the national fixing of capital and their mobility in the form of global investment heavily influenced each state authority’s policy responses to the crisis at the expense of the interests of the poor, workers, and peasantry. Rather than pitching this as either evidence of persistent national differentiation or some Keynesian state resurgence, we argue from a historical materialist geographical framework that the responses of capital and state authorities in Mexico and Turkey actively constitute and reconstitute the global parameters of market regulatory design and neoliberal class rule through each state’s distinct domestic policy formation and crisis management processes. While differing in specific content the form of Mexico and Turkey’s state responses to the crisis ensured continuity in their foregoing neoliberal strategies of development and capital accumulation, most notably in the continued oppression of workers. That is, the prevailing strategy of accumulation continues to be variegated neoliberalism

The Episodes of Currency Crises in the European Transition Economies

The series of currency crises which hit several developing countries in the 1990s did not leave the emerging market economies of Central and Eastern Europe unscathed. However, contrary to the experience of Mexico in 1995 and South East Asia in 1997-1998, the roots of the crises in our region were usually less sophisticated and easier to identify. Most crisis episodes in the former communist countries fit nicely with the ”first generation” canonical model elaborated in 1979 by Paul Krugman and developed in 1980s by other economists. In this model, fiscal imbalances are the main factor leading to depleting international reserves of the central bank and speculative attacks against national currencies. This was the main reason behind all currency crises in our region, very often closely related to serious microeconomic weaknesses and delays in structural and institutional reforms. The only minor exception was the Czech Republic where the devaluation crisis in May 1997 (of rather limited magnitude) was caused by over-borrowing of the enterprise sector, an unreformed financial sector, and political turmoil rather than by fiscal imbalances and an excessively expansionary monetary policy. This volume, following another collection of similar monographs related to Latin American and Asian regions, presents five episodes of currency crises in Eastern Europe in the second half of 1990s. Four of them were related to post-communist economies and one (Turkey) to a developing economy aiming to integrate with the EU and suffering many macroeconomic and structural weaknesses similar to those of the transition group. Bulgaria in 1996-1997 represents the first episode of a full-scale financial crisis, involving drastic currency devaluation and near-hyperinflation, a banking crisis and a near default on debt obligations. The roots of the crisis were fully domestic and, although severe, were restricted to Bulgaria. Russia's financial crisis in August 1998, despite similar characteristics and domestic roots as in Bulgaria, had an important international dimension. On the one hand, the first speculative attacks against the ruble in the fall of 1997 were triggered by crisis events in Asia, particularly in Hong Kong and Korea. On the other hand, when the Russian crisis erupted, it provoked a huge contagion effect across all the countries of the former USSR. It also caused a big turmoil on all segments of the international financial market, bringing the danger of a recession in the US and other developed countries, and triggering a currency crisis in Brazil few months later. The monographs on Ukraine and Moldova present two case studies of such a contagion effect. However, one should remember that these two economies (as well as most other FSU economies) experienced the same weaknesses and vulnerabilities as in Russia. Thus Russian events could only accelerate the crisis in these countries which was, in any event, hard to avoid. Finally, we present the analysis of the recent financial market crisis in Turkey, which fortunately has been stopped by fast and substantial IMF and World Bank support and has not evolved into a full-scale currency crisis.transition economies, crisis, fiscal policy, Bulgaria, Moldova, Russia, Turkey, Ukraine

A Leading Indicators Approach to the Predictability of Currency

In this paper, we present a leading economic indicators approach to the predictability of currency crises in Turkey. After summarizing main theoretical models of currency crises and discussing the possible origins of financial crises in the European ERM countries (1992-93), Turkey (1994) and Southeast Asian countries (1997-98), we survey the empirical literature on the predictability of currency crises. Our leading economic indicators approach based on Burns and Mitchell (1946) shows that terms-of-trade, market-determined exchange rate over official exchange rate and some survey data can be considered as leading economic indicators of currency crises in Turkey.Leading economic indicators, predictability of currency crises, Turkey

Financial stability challenges in candidate countries - managing the transition to deeper and more market-oriented financial systems.

This paper reviews financial stability challenges in the EU candidate countries Croatia, Turkey and the former Yugoslav Republic of Macedonia. It examines the fi nancial sectors in these three economies, which, while at very different stages of development and embedded in quite diverse economic settings, are all in a process of rapid financial deepening. This manifests itself most clearly in the rapid pace of growth in credit to the private sector. This process of financial deepening is largely a natural and welcome catching-up phenomenon, but it has also increased the credit risks borne by the banking sectors in the three economies. These credit risks are compounded by the widespread use of foreign currency-denominated or -indexed loans, leaving unhedged bank customers exposed to potential swings in exchange rates or foreign interest rates. Moreover, these financial risks form part of a broader nexus of vulnerabilities in the economies concerned, in particular the external vulnerabilities arising from increasing private sector external indebtedness. That said, the paper also fi nds that the authorities in the three countries have taken several policy actions to reduce these fi nancial and external vulnerabilities and to strengthen the resilience of the financial sectors. JEL Classification: F32, F41, G21, G28.Europe, banking sector, vulnerability indicators, capital inflows, emerging markets.

Between a rock and a hard place: corporate elites in the context of religion and secularism in Turkey

Drawing on discourse analyses of 36 in-depth interviews with elite business people from Turkey, the study identifies the networking patterns of new and established business elites in the context of economic liberalization and socioreligious transformation of the country. Through a comparative analysis of the so-called secular and religious elite networks, we demonstrate the role of institutional actors such as the government, and identity networks, based on religion and place of birth in shaping the form and content of social networks among business elites in Turkey. In order to achieve this, we operationalize Bourdieu's notion of theory of practice and Granovetter's theory of social networks, illustrating the utility of combining these approaches in explicating the form and content of social networks in their situated contexts, in which power and divergent interests are negotiated.Galatasaray University Research Fund [grant number 12.102.005]

Financial stability challenges in candidate countries - managing the transition to deeper and more market-oriented financial systems

This paper reviews financial stability challenges in the EU candidate countries Croatia, Turkey and the former Yugoslav Republic of Macedonia. It examines the fi nancial sectors in these three economies, which, while at very different stages of development and embedded in quite diverse economic settings, are all in a process of rapid financial deepening. This manifests itself most clearly in the rapid pace of growth in credit to the private sector. This process of financial deepening is largely a natural and welcome catching-up phenomenon, but it has also increased the credit risks borne by the banking sectors in the three economies. These credit risks are compounded by the widespread use of foreign currency-denominated or -indexed loans, leaving unhedged bank customers exposed to potential swings in exchange rates or foreign interest rates. Moreover, these financial risks form part of a broader nexus of vulnerabilities in the economies concerned, in particular the external vulnerabilities arising from increasing private sector external indebtedness. That said, the paper also fi nds that the authorities in the three countries have taken several policy actions to reduce these fi nancial and external vulnerabilities and to strengthen the resilience of the financial sectors