Turkey’s Political Economy: A Modern Perspective

This paper argues that Turkey’s ambition to assert itself as a regional power has reconfigured its political economy, aligning macroeconomic governance with strategic geopolitical doctrines. By treating foreign policy as a driver of economic development, the study offers an interpretation of Turkey’s hybrid institutional model. Through an integrated analytical framework that combines Developmental State Theory, the Varieties of Capitalism, and the Post-Washington Consensus, the paper examines how doctrines such as Strategic Depth, Blue Homeland, Asia Anew, Opening Africa, Opening to Latin America, and the development of strategic industries have shaped fiscal priorities, sectoral policies, and institutional configurations. The analysis unfolds in six parts: it begins with a theoretical framework that positions Turkey within hybrid capitalism. It traces the historical foundations of its state-led economic model; assesses recent macroeconomic trends including inflation, currency instability, and labour market fragmentation; explores foreign policy as a tool of economic statecraft; and evaluates sectoral strengths and vulnerabilities across energy, infrastructure, agriculture, and capital markets. Empirically, the study draws on macroeconomic data, institutional analysis, and regional case comparisons to assess Turkey’s evolving developmental trajectory. The findings reveal a state that exhibits features of both dynamism and fragility: strategic sectors – in particular, the defence industry that emerged as a central pillar of Turkey’s political economy – display resilience and entrepreneurial vitality, yet they are undermined by policy volatility and geopolitical overreach. The paper concludes that Turkey’s long-term economic resilience hinges on balancing strategic autonomy with international cooperation and rethinking the foundations of its economic governance. As such, Turkey offers a broader lesson for emerging powers navigating the trade-offs between regional ambition and sustainable development.