Structural Transformation and Income Distribution in Turkey

Abstract

The last 17 years have been an exceptional period in the history of Turkey for three reasons. First, a newly founded political party came into power after a snap election in November 2002 and has remained there as a single-party government for more than 17 years. This election also marked both a drastic change in the existing political establishment and a rise of a new one with the leadership of the AK Party (Justice and Development Party). This political transformation has later become a reason for many to appeal public confidence in the Turkish economy. Second, changes in the political front were accompanied by an expansionist financial policy in the world economy, and the Turkish economy was eventually exposed to a massive amount of capital inflows, which were used to expand the volume of domestic credit allowing for a consumption boom. Third, this new political era witnessed a relatively successful economic performance, especially in the period between 2003 and 2007, by enhancing positive public perception about this new political establishment led by the AK Party