Institutions, Economic Development and Foreign Policy: An Institutional Perspective on Turkey’s Foreign Policy – H. Emrah Karaoğuz
Foreign policy experts
seldom focus on institutions that affect a country’s economic development
dynamics when conducting foreign policy analysis, as they often think these are
out of scope. Although many aspects of the economy related to foreign policy
are included in the discussions, it is rare to focus on institutions that
affect economic development at home. Similarly, economists rarely look at the
foreign policy aspect of growth in their analysis of Turkey. Even though
external factors and critical foreign policy choices are included in the scope
of the discussions, foreign policy-making processes and the relationship
between these processes and institutions that affect economic development is
not a subject to be focused on. However, as an increasing number of studies
emphasize, there is a direct interaction between these two, affecting Turkey’s
economic development process and foreign policy preferences. To put it briefly,
“developmental foreign policy” is essential to successful developmentalism
under today’s circumstances.
First, it should be
emphasized that which institutions trigger economic development is a
controversial issue. There is no consensus on the concept of “institution”
itself. This paper defines institutions as “the rules of the game” per Douglass
North’s definition. Institutions described in this way shape the preferences
and behaviors of actors on the one hand, and they are shaped by them in return.
Formal (laws, regulations, etc.) or not (norms, values, culture, etc.)
institutions ensure predictability in the system. They are more than organizations.
For instance, in general usage, the Ministry of Industry and Technology is a
government institution. However, the concept of institution used in political
economy analyses also covers the rules that the Ministry of Industry and
Technology has contributed to the formation of, created, or affected by. For
example, the Technopark Law or the R&D Law are formal institutions in this
context. In what ways actors’ preferences and behavior are affected by how laws
are interpreted and implemented is about informal institutions.
Different types of
state-led developmentalism have emerged as prominent development models under the
current global conjuncture. Although there is no consensus on definitional
issues, concepts such as state capitalism, developmental state, and
entrepreneurial state concentrate on different dimensions of state-led
development. Analyses in this line of thinking usually adopt an institutionalist
perspective. The leading institutions in this regard are related to state
structure and state-society relationships. Besides genuine political will, critical
institutions of 21st-century developmentalism are as follows: (i) institutions
that ensure professionalism and meritocracy in bureaucracy, (ii) whether
centralized or decentralized, institutions that prioritize entrepreneurship and
innovation in the state-society relationship, and (iii) institutions ensuring
the legitimacy of policymaking and implementation processes (outcomes also) by
the general public. The institutionalist perspective asserts that these
institutions’ degree of effectiveness conditions a country’s switch to high
value-added production, position in global value chains, and economic
development.
What do all these issues,
namely domestic institutions conditioning the success of a country’s economic
development initiatives, have to do with foreign policy? What does this mean in
the context of Turkey’s foreign policy? These two questions can be examined based
on our co-authored
article with Mustafa Kutlay.
As indicated above,
bureaucratic structure, the functioning of the bureaucracy, and how the
state-society relationship is institutionalized affect the economic development
of a country. The same holds for foreign policy’s purpose, outcome, and
policy-making process. To exemplify in the context of Turkey’s diplomatic
network in the world, it is said in the news
published in November 2019: “Turkish diplomacy continues to expand its network
in the world with the goal of ‘Strong Turkey on the Field and at the Table.’ Eighty-three
new foreign representative offices have been opened in the last 17 years. The
number of diplomatic missions, 163 in 2002, increased to 246.” As frequently emphasized
in the press, Turkey is thus the fifth country with
the highest number of foreign representative offices worldwide. An important goal
of foreign representative offices is to help increase exports and support Turkey’s
economic development. The Minister of Foreign Affairs, Mevlüt Çavuşoğlu, emphasized
this aim of the offices with the following words: “Each of our friends
(ambassadors) has a goal. To increase Turkey’s exports to the country where
they are located and accredited.”
Increasing the number of
foreign representative offices is a step taken in the right direction and a
significant development. However, some issues need to be evaluated from an
institutionalist perspective for Turkey to achieve exceptional export-led
development success, like the “Asian Tigers.” For instance, how are foreign
representative offices structured to help increase exports? How long in advance
do the officials learn in which region or country they will work? For how long
do they stay on duty? Do the officials have the time to learn countries’ languages
and the nature of their institutions before their assignment to posts? To what
extent are these issues and processes improved by getting feedback from
diplomats and officials? To what extent are the expectations of umbrella
organizations representing the business world and the private sector more generally
considered? To what degree are feedback mechanisms inclusive and
institutionalized? These and similar questions are crucial.
To exemplify, the
following statement that is taken from a MUSIAD
report on trade diplomacy, which was published in 2018, is
suggestive: “considering the literature on trade diplomacy, positive and
negative outcomes of implementations, and the business world’s expectations, it
is of great importance for the Turkish economy to switch to a new model based
on trade diplomacy, in which both the public and private sectors play a role.”
The following suggestion in the same report is also related to this statement.
“Entrepreneurial
and business-oriented diplomats who cooperate with a wide variety of
institutions and organizations should replace classical diplomats who perform
their duties in isolation within the central bureaucracy. Even if the office
coordinating trade diplomacy is established by the state, the business
representatives working in this office must be more than public employees.
Thus, the business world will be able to put into practice the new ideas and
strategies it has developed directly through this unit. Reorganization of
representative offices abroad (responsible for economic relations) in this way
is of critical importance.”
These suggestions
highlighted in the MUSIAD report for Turkey to pursue an effective
developmental foreign policy are necessary. It is also essential that there is good
cooperation among state organizations that focus on economic development and
foreign relations. Having enough officials working abroad under a conducive
bureaucratic structure is necessary. These officials should be able to follow
both the market conditions there (potential sectors, investment areas, etc.)
and conditions in Turkey (investor profile, etc.). In addition, a nodal state agency
should ensure bureaucratic coordination and monitor the operation and
performance of the system with the necessary feedback mechanisms and impact
analysis. In brief, all institutions that affect economic development at home
should also work in foreign policy, which should be designed by considering the
country’s development goals. It is seen that these mechanisms have been
implemented to a large extent in the successful cases of “trading states” such
as Germany and South Korea.
All this analysis prompts
the following question: According to the institutionalist perspective presented
here, to what extent has Turkey become a “resilient” trading state between 2002
and 2010? In other words, if Turkey had been an institutionalized trading state
like Germany and South Korea in this period, would it have followed a more
pragmatic strategy (prioritizing economic relations) when faced with post-2010
global and regional shocks (especially Arab uprisings)? On a different note, to
what extent are policy-making processes related to state support for increasing
exports in the defense industry sector, where successful initiatives are
currently observed, systematic and participatory? To what extent does the
private sector get state support in building and improving foreign relations? What
roles do foreign representative offices play in this context? It is essential to
examine all these questions that relate economic development to foreign
(economic) policy in detail.
To conclude, if an
institutionalist and political economy perspective is taken on the
multi-dimensional issue of foreign policy, it can be seen that Turkey aims to
pursue a developmental foreign policy today. This is so when neoliberal
globalization is weakening and more state-led and protectionist globalization
is dominant. Nevertheless, it should be noted here that Turkey’s realization of
its envisaged developmental foreign policy will also depend on to what degree
the institutions mentioned above will function. Institutionalized participatory
policy-making processes will prevent drastic economic and foreign policy drifts
caused by changing internal and external conditions, strengthening the
consistency of long-term strategic plans. From this angle, it would be useful
to examine the steps and initiatives taken on economic development and foreign
policy.
* This elaboration draws
on the following study: Karaoğuz, Hüseyin Emrah, and Mustafa Kutlay. 2022. “The
Ties That Don’t Bind: Trading State Debates and Role of State Capacity in
Turkish Foreign Policy.” Southeast
European and Black Sea Studies 0 (0): 1–21, DOI:
10.1080/14683857.2022.2109828.
H. Emrah Karaoğuz is an assistant professor at Kadir Has University, International Relations Department. His research is mainly on international/comparative political economy, political economy of development, and political economy of foreign policy. His articles have appeared in Third World Quarterly, Globalizations, Southeast European and Black Sea Studies, and Turkish Studies among others
To cite this work: Emrah Karaoğuz, “Institutions, Economic Development and Foreign Policy: An Institutional Perspective on Turkey’s Foreign Policy”, Panorama, Online, 31 January 2023, https://www.uikpanorama.com/blog/2023/01/31/ek/
This article has been prepared with the support provided to the International Relations Council and the Global Academy by the Heinrich Böll Stiftung Association Turkey Representative within the scope of the project titled ‘Foreign Policy for the 21st Century; Peaceful, Equitable, and Dynamic Turkey’.
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